Page 10 - Banking Finance February 2018

RBI CORNER

RESERVE BANK

NEWS
NEWS
NEWS
NEWS
NEWS

Reserve Bank cancels bids for bonds worth Rs. 11,000 crore RBI sees moderate rise in
The Reserve Bank of India has refused to accept bids for Rs 11,000 crore worth advances
of bonds in the final auction of this calendar year. In all, RBI has observed moderate increase
four bonds for Rs 15,000 crore were on offer. Bids for two in bank credit in
bonds--one maturing in 2022 (Rs 3,000 crore on offer) and its 'Report on
another in 2031 (Rs 8,000 crore)-were rejected by the cen-
Trends and
tral bank. It sold the remaining two bonds worth Rs 2,000 Progress of
crore each and maturing in 2033 and 2046.
Banking in India
RBI said that high yields would not be acceptable to the central bank or the (2016- 2017).' It said that loan growth
government. Also, and that the yield movement have been over the top in a of scheduled commercial banks had
short span. These efforts along with the Prompt Corrective Action initiated by improved to 6.2 per cent at the end
the RBI was intended to instill confidence in the system so that excessive finan- of September 2017 as compared to 5
cial imbalances will be prevented, the RBI said. per cent at the end of June 2017.
Stressed assets have stabilised at an
IMF seeks more independence of RBI over PSU banks elevated level (12.2 per cent in Q2 of
IMF-World Bank report gave a thumbs-up to the government's moves to clean 2017-18). The report noted the rela-
up the banking sector and address bad loans, and said tively better performance in the
more steps were needed to be taken, including further NBFC sector, with their balance-
sheets expanding 6 per cent year-on-
strengthening the Reserve Bank of India's independence
and its powers over PSU Banks. year in the first half.
Their loan book grew at an impres-
It also supported the Financial Resolution and Deposit sive 14.9 per cent - a full 7 percent-
Insurance Bill, 2017, but recommended further age points higher than the previous
strengthening of the deposit insurance scheme. "India's key banks appear resil-
year. The RBI observed that the reso-
ient, but the system is subject to considerable vulnerabilities," said the IMF in its
lution of stressed assets and
Financial System Stability Assessment (FSSA) report on India. The report is based strengthening of public sector banks'
on the work of the Financial Sector Assessment Program (FSAP) mission of the balance-sheets are its top priority.
IMF and World Bank, which visited India in March 2017 and June-July 2017 and
It said that the enactment of the In-
met with senior officials in the Finance Ministry, RBI and SEBI.
solvency and Bankruptcy Code (IBC)
"The recapitalisation plan is extremely positive and will ensure that banks have had altered the financial landscape
adequate capital to address their non-performing assets," Marina Moretti, As- and imbued with optimism and re-
sistant Director and IMF Mission Chief for India FSSA, Monetary and Capital solve the ongoing efforts for resolu-
Markets Department told. tion of stress.

10 | 2018 | FEBRUARY | BANKING FINANCE

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