Banks have boosted their holdings of rupee notes from companies to an all-time high. Total holdings of corporate bonds and commercial paper held by local banks surged to a record of almost 7 trillion rupees ($93 billion) in late May, data from the Reserve Bank of India this week show. The central bank extended a $50 billion emergency credit line to lenders in March to spur them to boost financing to companies squeezed by the pandemic and an economic contraction caused by steps to contain it.
Indian borrowers have been rushing bond deals to market in recent weeks, after government and central bank measures to support companies pushed the average yield on rupee notes to the lowest since 2004 earlier this month. Lower-rated companies have also benefited from those initiatives, with issuance from weaker names rising to a 15-month high in June, rebounding from a plunge in April and May.
With India’s central bank forecasting the economy will contract this fiscal year for the first time in more than four decades, the bond market also gives banks, wary of defaults, the ability to invest in the debt of top-rated companies.
RBI and Banks deploy close to Rs 8000 cr to ease Mutual Fund liquidity
Banks and the RBI have deployed close to Rs 8,000 crore to ease the liquidity pressure in the mutual fund industry in April and May.
The data compiled by the RBI shows banks deployed Rs 5,522 crore from their own resources under the Special Liquidity Facility for Mutual Funds (SLFMF) scheme for Rs 50,000 crore announced by the regulator. This is in addition to Rs 2,430 crore availed from the RBI under the SLF-MF scheme.
In March-April 2020, mutual funds faced redemption pressure due to volatility in capital markets. Their woes intensified after closure of six debt MF schemes by Franklin Templeton MF. On April 27, the RBI introduced SLF-MF with several regulatory benefits in order to ease liquidity pressure on MFs. The funds availed under SLF-MF were to be used by banks exclusively for meeting the liquidity requirements of MFs by extending loans and undertaking outright purchase or repos against the collateral of investment-grade corporate bonds, commercial papers and debentures held by MFs.
On April 30, the regulatory benefits announced under the SLF-MF scheme were extended to banks, which deployed their own resources. While easing the redemption pressure on MFs, these measures also helped to increase the trading volume in the secondary market for corporate bonds.
The RBI’s liquidity offer brought some degree of comfort in the debt market which was under huge redemption pressure. Faced with huge redemptions, Franklin Templeton had closed six credit schemes, effectively locking up Rs 28,000 crore of investors’ money.
RBI needs to revisit policy restricting big corporates from promoting banks
Former RBI deputy governor R Gandhi on Monday said the central bank needs to relook at rules restricting large corporates from promoting banks and allow single entity to hold up to 26 per cent by having the necessary safeguards. He said the needs and aspirations of the Indian economy make it necessary to look at sources of large capital from entering the banking fray, so that large projects can be supported and also pitched for a renewed thrust to be given to the wholesale banks model.
Gandhi, who used to take care of the critical banking regulation and supervision functions at the Reserve Bank, said in the last four years since the central bank made licensing for universal ‘on-tap’, no serious application has been received for floating banks.
Continue reading your story on the app
Continue reading your story in the magazine
Artificial Intelligence And Intelligent Banking
Is artificial intelligence less than our intelligence? - Spike Jonze
SIMPLIFYING 'SARFAESIA, 2002'
To expedite recoveries by the Banks, the law called as Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, 2002, popularly called as SARFAESIA has been enacted.
WOMEN AND MONEY MATTERS
We are part of a society that continues to view women as the weaker section. The age-old practices and norms always tended to give little importance to women down on the scale of progress.
TIGHTENING THE SCREWS
Non-Banking Financial Corporations (NBFCs) due to their magnitude, intricacy and interconnectedness are revolving systematically over the years.
REDEFINING FARMERS INTEREST
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 was promulgated on June 5, 2020. It provides a framework for the protection and empowerment of farmers with reference to the sale and purchase of farm products.
ROLE OF HR AS A STRATEGIC PARTNER
Strategic human resource management involves a future-focused goal-oriented process of developing and implementing HR programs and initiatives that will address and solve business problems and directly contribute in achieving major long-term business objectives of the organization.
From Internet Of Things To Banking Of Things
Introduction The concept of the 'Internet of Things [IoT]' emerged in the early 1980s when technology started to influence business processes.
The Future Of Artificial Intelligence In Banks
As per the World Economic Forum's latest research, artificial intelligence is already changing the way financial institutions provide more contextualized services to their customers and banking is no exception.
NEW AGE CUSTOMERS BUILDING THE DIGITAL CAPABILITIES
Introduction Consumer markets in India are expected to reap the benefit of favorable macroeconomic parameters as well as its demographics. India is one of the youngest major countries globally and has become one of the major flag bearers of development across the globe.
Enhancements to Indo-Nepal Remittance Facility Scheme RBI/2021-22/94
Beyond Traditional and Modern
JYOTI BHATT is a celebrated and awarded artist, best known for his work in painting and printmaking, as well as his photographic accounts of rural Indian culture and folk art. He and his colleagues founded the “Baroda School” of Indian art. He was awarded the Padma Shri in 2019, and has been honoured with five Lifetime Achievement Awards. In August 2021 he had a conversation with ANANYA PATEL, musing about his life and his art. Excerpts from that conversation are presented in this 2-part series, along with some of his work.
THE GAME CHANGER
INSIDE DHD’S RECORD-SETTING DURAMAX
I Am Coconut … A Killer Nut? Not Even Close
The FOOD ON YOUR PLATE
Building Community Through Education
KIRAN BIR SETHI is changing the experience of childhood in Indian cities through her education curriculum and initiatives to build healthy relationships between students and their communities. Here she is interviewed by KASHISH KALWANI.
Granny Chic Galore!
A homeowner’s holiday décor is an homage to Christmas at her grandma’s house.
INDIANA NOTIFYING 750K AFTER COVID-19 TRACING DATA ACCESSED
Indiana health officials said they are notifying nearly 750,000 state residents that a cybersecurity company “improperly accessed” their personal data from the state’s online COVID-19 contact tracing survey — a description the company disputed as a “falsehood.”
What is My Stereo's Gender?
Readers will recall, distressingly, that I have tried their patience on just about every topic that marginally relates to audio. LP grooves, CD bumps, flat response, boomy bass, warm recordings, cold binary bits—I have waxed philosophically on all of them. Which bring us to today’s audio topic: gender.
One of my closest friends in my hometown had a love marriage, which many considered to be a rebellious act against our small society.
Contentment - THE ART OF REMOVING AND CREATING HABITS
DAAJI continues his series on refining habits, in the light of Patanjali’s Ashtanga Yoga and current scientific and yogic principles and practices. Last month, he explored the first Niyama of purity, shaucha. This month he shares his insights on that pivotal human quality – contentment, which is known in Yoga as santosh.
Carlyle's Goyal Brings India Lessons to Infrastructure, Energy Investing
POOJA GOYAL, 41, brings a unique personal insight to Carlyle Group Inc., where she leads the renewable and sustainable energy team and co-heads the infrastructure group.