Page 13 - Banking Finance June 2021

RBI CORNER

per cent for Q3 and 5.1 per cent for ground and with fiscal support in year to 9.5 per cent from 10.5 per cent
Q4. retreat, the RBI will likely be hesitant earlier.
to remove policy accommodation It pegged retail inflation at 5.1 per
RBI imposes Rs 11 lakh anytime soon. cent in 2021-22, with upside risks from

penalty on banks "Consumer inflation spiked in May... higher commodity prices and re-
This may cause the RBI to revisit its emergence of higher supply
The Reserve Bank of India (RBI)
focus on growth risks. Still, we think a constraints amidst the current phase of
imposed a penalty of Rs 11 lakh on
rate hike is unlikely this year," Oxford lockdowns. ICRIER RBI Chair Professor
Bijnor Urban Co-operative Bank
Economics said. in Macroeconomics Alok Sheel said as
Limited, Bijnor and National Urban Co-
operative Bank Limited, New Delhi for The forecasting firm said that given expected, the monetary policy
committee (MPC) of RBI decided to
contravention of certain norms. the evidence from last year, when
supply side disruptions had led to an keep policy rates on hold, while stating
The RBI said the penalties have been its intention to continue injecting more
unanticipated spike in inflation, such
imposed based on deficiencies in liquidity in financial markets, including
regulatory compliance and is not developments may partly be buying government debt.
attributed for the inflation pick-up in
intended to pronounce upon the
May.
validity of any transaction or
agreement entered by the two lenders "However, as we have highlighted, the RBI may use money
with their customers. 2021 lockdowns are not as stringent; managers to boost forex
and have allowed for greater
While, a penalty of Rs 6 lakh has been reserves yield
movement of people, goods and
imposed on the Bijnor Urban Co- The Reserve Bank of India (RBI) is
operative Bank Limited, and Rs 5 lakh vehicles. "This suggests that other weighing the choice of partaking
factors, such as the passthrough from
fine has been imposed on the National specialist money managers to assist
WPI (Wholesale Price Index) to CPI
Urban Co-operative Bank Limited. enhance yields on the reserves fund as
(Consumer Price Index) and demand-
The inspection report of the Bijnor side pressures, are at play as well," it charges hit report lows globally. Given
Urban Co-operative Bank based on its said. the growing complexities of managing
financial position as on March 31, inflows from a number of channels, the
2019, revealed, inter alia, that the RBI additionally needs higher
bank failed to adhere to the provisions RBI's growth supporting safeguards for the burgeoning corpus
related to prohibition on director measures crucial for that now quantities to a few fifth of
related loans and issue of performance recovery from 2nd COVID India's gross home product (GDP).
guarantee, the RBI said. Mumbai: India's central financial
wave institution is probably going to interact
Retail inflation spike might The measures announced by RBI to exterior monetary consultants to
cause RBI to revisit focus maintain liquidity and support handle part of its report $600-billion
economic growth through lower international alternate reserves,
on growth risks interest rates will be crucial for dusting off a playbook used practically
Retail inflation spike in May might recovery from the second wave of the twenty years in the past when the
cause the RBI to "revisit its focus on COVID-19 pandemic, experts said. The corpus crossed the twelve-digit
growth risks", global forecasting firm RBI in its monetary policy kept interest threshold for the primary time.
Oxford Economics said adding that a rates unchanged at record lows and The Reserve Bank of India (RBI) is
rate hike is still unlikely this year. It committed to maintaining an weighing the choice of partaking
added that the underlying dynamics of accommodative policy stance to specialist money managers to assist
the May inflation print augur caution support growth. It, however, slashed enhance yields on the reserves fund as
and the recovery remains on uncertain its growth projection for current fiscal charges hit report lows globally. T

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