Page 10 - Banking Finance March 2021

RBI CORNER

sent to the bank and the state on margin posted and collected on operative banking sector having
government did not get any response. their own account or on behalf of their regards to the Principles of
customers for a permitted derivative Cooperation as well as depositors'
RBI allows banks to post contract entered into with a person interest and systemic issues.
and collect derivative residing outside India.
Further, these banks shall maintain a Growth momentum needs
contract margin
separate account in the name of
RBI has allowed Authorised Dealer to be stronger: RBI
persons residing outside India for the
(AD) Category-I Banks to post and governor Shaktikanta Das
purpose of posting and collecting cash
collect margin in India, on their own
margin in India, and transactions The growth momentum needs to be
account or on behalf of their incidental thereto. strengthened for a sustained revival of
customers, for a permitted derivative
the economy and quick return to the
contract entered into with a person RBI sets up panel for pre-Covid trajectory, opined RBI
residing outside India.
strengthening UCBs governor Shaktikanta Das while
The AD Cat-I Banks can post and pitching for a status quo on rates at the
collect margin in the form of Indian The Reserve Bank of India has set up last meeting of the Monetary Policy
of an eight-member expert committee
currency; freely convertible foreign Committee (MPC).
on urban co-operative banks (UCBs) to
currency; debt securities issued by All the six members of the MPC had
Indian Central government and State examine their issues and provide a
roadmap for strengthening the sector. voted for keeping the policy repo rate
governments; and rupee bonds issued unchanged at 4 per cent at the three-
by persons residing in India. The panel, to be headed by former RBI day meeting which began on February
Deputy Governor NS Vishwanathan,
In the case of rupee bonds issued by 3, citing similar reasons.
persons residing in India, they have to will take stock of regulatory measures
taken by the central bank and other Das, according to the minutes of the
be listed on a recognised stock
authorities in respect of UCBs and meeting released by RBI, had said:
exchange in India; and assigned a "Growth, although uneven, is
credit rating of 'AAA' issued by a rating assess their impact over last five years
to identify key constraints and recovering and gathering momentum,
agency registered with the Securities
enablers, if any, in fulfilment of their and the outlook has improved
and Exchange Board of India.
socio-economic objective, the RBI said. significantly with the rollout of the
If different ratings are accorded by two vaccine programme in the country."
or more credit rating agencies, then It will also review the current
regulatory and supervisory approach "The growth momentum, however,
the lowest rating shall be reckoned.
and recommend suitable measures to needs to strengthen further for a
AD Cat-I banks may post and collect strengthen the sector, taking into sustained revival of the economy and
such margin outside India in the form account recent amendments to the for a quick return of the level of output
of freely convertible foreign currency; Banking Regulation Act, 1949. The to the pre-Covid trajectory," he added.
and debt securities issued by foreign
panel will also suggest effective Given the sharp moderation in
sovereigns with a credit rating of 'AA- measures for faster rehabilitation or inflation along with a stable near-term
' and above issued by S&P Global resolution of UCBs and assess potential outlook, he said, the monetary policy
Ratings / Fitch Ratings or 'Aa3' and
for consolidation in the sector. It will needs to continue with the
above issued by Moody's Investors consider the need for differential accommodative stance to ensure that
Service.
regulations and examine prospects to the recovery gains greater traction
If different ratings are accorded by two allow more leeway in permissible and becomes broad-based.
or more credit rating agencies, then activities for UCBs with a view to
The RBI kept the policy rate
the lowest rating shall be reckoned. enhance their resilience.
unchanged for the third time in a row
The RBI, in a notification, said AD Cat- It will draw up a vision document for a in its last monetary policy review for
1 Banks may receive and pay interest vibrant and resilient urban co- 2020-21 on February 5. T

10 | 2021 | MARCH | BANKING FINANCE