Banking Current Affairs 2015

RBI keeps key rates unchanged but changes statutory liquidity ratio

The Reserve Bank of India (RBI) has announced sixth Bi-Monthly Monetary Policy Statement.

In its bi-monthly monetary policy statement, RBI has not changed its main lending rate i.e.Repo Rate and cash reserve ratio (CRR). But changed statutory liquidity ratio (SLR) of scheduled commercial banks.

On the basis of an assessment of the current and evolving macroeconomic situation, RBI has been decided to:

  • Repo rate- kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.75 per cent.
  • Cash reserve ratio (CRR) – kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL).
  • Statutory liquidity ratio (SLR) – reduced the SLR of scheduled commercial banks by 50 basis points from 22.0 per cent to 21.5 per cent of their NDTL.
  • Reverse repo rate under the LAF – remains unchanged at 6.75 per cent.
  • Marginal standing facility (MSF) rate- remains unchanged at 8.75 per cent.
  • Bank Rate – remains unchanged at 8.75 per cent.

Earlier on 15 January 2015, RBI had changed repo rate by 25 basis points from 8.0 percent to 7.75 percent.

Statutory Liquidity Ratio: SLR refers to the proportion of its total NDTL that the bank has to maintain in form of liquid assets. These liquid assets can either be cash or gold or unencumbered government securities. This directly affects the proportion of funds that the bank can lend.

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RBI constitutes high level panel on urban cooperative banks (UCB)

The Reserve Bank of India (RBI) has constituted a high-powered panel on urban cooperative banks (UCB).

It will be headed by RBI Deputy Governor R Gandhi and comprise of eight member who will be experienced bankers. They will submit its report within three months from the date of its first meeting.

This high-powered panel will re-examine and recommend appropriate set of businesses, size, conversion and licensing terms for the UCB sector.

The Terms of Reference of the high level panel are:

  • Businesses: Examine the line of businesses that UCBs may be permitted to undertake and their benchmark in terms of size of business, capital requirement, regulatory regime etc.
  • Size of UCB: Suggest the appropriate size up to which a UCB may be able to grow without undue risk to the system.
  • Conversion Criteria & licensing terms : Suggest the criteria for allowing voluntary conversion by a UCB and examine whether the time is opportune to give license to new UCBs.
  • Determine the modalities of implementing the suggestion of the Malegam Committee. Especially, whether the 50 per cent in value of deposits should be held by voting members. Thus, propose a feasible structure that puts majority voting in the hands of contributors of funds in UCB.

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Scientist V K Saraswat joins as full-time member of NITI Aayog

Former DRDO chief Vijay Kumar Saraswat has taken charge as full time-member of National Institution for Transforming India (NITI) Aayog.

V K Saraswat

  • He had played a very significant role in the development of the country’s first Liquid Propulsion Engine, DEVIL.
  • He was Project Director of Prithvi and had steered the design, development, production and induction of the first indigenous Surface-to-Surface missile system into the armed forces.
  • He was Secretary of Defence (Research & Development) and Director General of Defence Research & Development Organisation (DRDO).
  • Awards: He was conferred the Padma Shri (1998) and Padma Bhusan (2013).

Background

Earlier on 1 January 2015, Union Government had announced the replacement of 6 decade year old Planning Commission with new age NITI Aayog to function as both a think-tank and a policy forum for government.

On 5 January 2015, Prime Minister Narendra Modi as Chairman of NITI Aayog had appointed V K Saraswat along with eminent economist Bibek Debroy as its full time members and Arvind Panagariya as its first Vice-Chairman.

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