Rbi governor urjit patel said we have to be vigilant

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RBI Governor Urjit Patel said, “We have to be vigilant on account of uncertainties on the external and fiscal fronts; this calls for a cautious approach. I, therefore, vote for keeping the policy repo rate on hold, while maintaining the stance as neutral ,” he added. As core inflation is likely to stay above 4% amid rising risks of a fiscal slip, the rates are expected to stay unchanged in their baseline scenario, including at the next policy meeting on December 6, with a 5-1 vote. Rs. 2.11 lakh crore for PSU banks to boost lending The Centre unveiled an ambitious plan to infuse Rs. 2.11 lakh crore capital over the next two years into public sector banks (PSBs) saddled with high, non-performing assets and facing the prospect of having to take haircuts on loans stuck in insolvency proceedings. The move is vital for the slowing economy, as private investments remain elusive in the face of the twin-balance sheet problem ” afflicting corporate India and public sector banks reflected in slow bank credit growth. Several economists opine that the recapitalisation of banks — so that they can lend more freely and help revive private investment — is critical for revitalising India’s growth momentum at a time when the global economy is recovering. The Financial Services Secretary added that this would be funded through budgetary provisions of Rs. 18,139 crore and the sale of recapitalisation bonds worth Rs. 1.35 lakh crore. The balance would be raised by the banks themselves by diluting the government’s equity share. The effect on the fiscal deficit will depend on the nature of the bonds and also how they are dealt with. Globally, the practice is to not include bonds in the fiscal deficit calculation. In India, we do include it.
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CURRENT AFFAIRS OCTOBER 2017 80 | Page 9004078746 [email protected] ‘Bank funding will be liquidity-neutral’ The Centre’s move to infuse Rs. 2.11 lakh crore capital into public sector banks through recapitalisation bonds and budgetary support is a welcome step, according to Urjit Patel, Governor, Reserve Bank of India. He added the recapitalisation bonds will be liquidity-neutral for the government except for interest payment that will contribute to the annual fiscal deficit numbers. The banks will be recapitalised over a period of two years through recapitalisation bonds and budgetary provision. Dr. Patel said a well-capitalised banking system was a pre-requisite for stable economic growth and this package to restore the health of the banking system was a monumental step forward in Note ban anniversary: RBI says still verifying returned notes Nearly a year after Prime Minister Narendra Modi announced demonetisation, the Rs 500 and Rs 1,000 bills returned to banks are still being “processed in all earnest” through a sophisticated currency verification system, the RBI has said.
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