#RBI monetary policy update

[thehansindiaseo]

RBI Keeps Repo Rate at 6.5%, Changes Policy Stance to Neutral

RBI's MPC holds repo rate at 6.5% while shifting its policy stance to neutral, signaling future flexibility amid inflation concerns and economic growth projections.

[news365timesindia]

[ad_1] Paromita Das GG News Bureau New Delhi, 28th Dec. A Reversal of Opinions: Raghuram Rajan, the former Governor of the Reserve Bank of India (RBI), has been a vocal critic of the Modi government during his tenure at the central bank. His frequent disagreements with the government, particularly over monetary policies and handling of the economy, earned him the tag of being a “darling of the opposition.” However, in a surprising turn of events, Rajan recently lauded the Modi administration for its effective management of Non-Performing Assets (NPAs), a key challenge for the Bharatiya banking system. This unexpected praise comes after years of sharp criticisms and is worthy of scrutiny, considering Rajan’s pivotal role in the banking reforms during his tenure at RBI. Understanding the NPA Crisis: The Historical Context: To comprehend the significance of Rajan’s recent remarks, it is essential to revisit the context of Bharat’s NPA crisis. NPAs are loans that have gone unpaid for an extended period, and their rise in the Bharatiya banking system has been a long-standing issue, primarily beginning after the global financial crisis of 2008. Rajan noted that projects funded by banks before the crisis started facing significant setbacks post-2008 due to factors such as corruption, delays in permits, and mismanagement. These factors caused a steep rise in NPAs, especially in public sector banks. Rajan’s 2015 Asset Quality Review (AQR) was a watershed moment in addressing this crisis. The AQR helped to clean up the balance sheets of banks by ensuring that bad loans were promptly identified, with the necessary provisioning made. According to Rajan, this was crucial for alleviating the growing financial insecurity surrounding public sector banks. He recalled how he took his proposal for an AQR and the end of the moratorium on bad loans to Arun Jaitley, the then Finance Minister, who approved it without hesitation. This marked a turning point in the fight against NPAs. The Modi Government’s Response, A Shift in NPA Management: Rajan’s praise for the Modi government’s handling of NPAs aligns with recent updates from Finance Minister Nirmala Sitharaman. According to her, between 2014 and 2023, the government’s initiatives helped recover more than ₹10 lakh crores from bad loans. The gross NPA ratio fell to a 12-year low of 2.8 percent by the end of the fiscal year 2024. These figures are a direct reflection of the government’s ongoing efforts to manage bad loans and prevent further escalation of the NPA crisis. Rajan acknowledges that the implementation of AQR was a pivotal step. However, the Modi government’s broader policy initiatives played a crucial role in reducing NPAs over time. One of the most significant steps was the introduction of the Insolvency and Bankruptcy Code (IBC) in 2016. This law gave authorities the power to take control of defaulting companies from their promoters, thereby protecting the interests of creditors. Additionally, wilful defaulters were barred from participating in the resolution process, ensuring that there would be greater accountability. Additional Measures to Tackle NPAs: Alongside the IBC, the government took several other steps to address the NPA issue. One such measure was the amendment to the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act) of 2002, allowing banks to auction the assets of defaulters. This was complemented by the establishment of the National Asset Reconstruction Company Limited (NARCL) to resolve stressed assets over ₹500 crore. The government also provided a ₹30,600 crore guarantee to back NARCL’s receipts, further enhancing the efficiency of the recovery process. Public sector banks were also restructured through the establishment of Stressed Asset Management Verticals, such as the one in the State Bank of India (SBI), to manage and recover loans more effectively. These verticals allowed banks to monitor loans more closely, ensuring that any potential defaults were caught early.

Moreover, the RBI implemented a system of Early Warning Signals (EWS) to trigger timely remedial actions for loans at risk of default. A Positive Outlook: Rajan’s Acknowledgment: Raghuram Rajan’s acknowledgment of the Modi government’s success in reducing NPAs is notable, especially considering his earlier critiques. He conceded that the government’s approach, including the AQR, the IBC, and other reforms, helped set the stage for the reduction in bad loans. As he put it, “Eventually the situation is back on track,” signifying a recovery after years of financial distress. Rajan’s perspective carries weight given his experience and expertise in managing the Bharatiya economy, and his remarks add credibility to the government’s claims of progress. Conclusion: The Long Road Ahead: While the reduction in NPAs under the Modi government is a significant achievement, experts agree that the work is far from over. The underlying issues that contribute to the creation of bad loans—such as poor project planning, delays in clearances, and systemic corruption��continue to be challenges for Bharat’s banking sector. Therefore, while Rajan’s praise is deserved, it also highlights the complexity of tackling NPAs and the need for continued vigilance. The government’s strategy of combining regulatory reforms, legal frameworks, and institutional restructuring has certainly yielded results. Yet, with Bharat’s banking sector still grappling with certain vulnerabilities, it is essential to keep refining these measures. Raghuram Rajan’s shift in stance reflects a recognition of these efforts, providing a balanced view of the Modi government’s handling of one of the most significant financial challenges in Bharat’s economic history.   The post Raghuram Rajan’s Remark on Modi Government’s NPA Management: A Shift in Perspective appeared first on Global Governance News- Asia's First Bilingual News portal for Global News and Updates. [ad_2] Source link

[news365times]

[ad_1] Paromita Das GG News Bureau New Delhi, 28th Dec. A Reversal of Opinions: Raghuram Rajan, the former Governor of the Reserve Bank of India (RBI), has been a vocal critic of the Modi government during his tenure at the central bank. His frequent disagreements with the government, particularly over monetary policies and handling of the economy, earned him the tag of being a “darling of the opposition.” However, in a surprising turn of events, Rajan recently lauded the Modi administration for its effective management of Non-Performing Assets (NPAs), a key challenge for the Bharatiya banking system. This unexpected praise comes after years of sharp criticisms and is worthy of scrutiny, considering Rajan’s pivotal role in the banking reforms during his tenure at RBI. Understanding the NPA Crisis: The Historical Context: To comprehend the significance of Rajan’s recent remarks, it is essential to revisit the context of Bharat’s NPA crisis. NPAs are loans that have gone unpaid for an extended period, and their rise in the Bharatiya banking system has been a long-standing issue, primarily beginning after the global financial crisis of 2008. Rajan noted that projects funded by banks before the crisis started facing significant setbacks post-2008 due to factors such as corruption, delays in permits, and mismanagement. These factors caused a steep rise in NPAs, especially in public sector banks. Rajan’s 2015 Asset Quality Review (AQR) was a watershed moment in addressing this crisis. The AQR helped to clean up the balance sheets of banks by ensuring that bad loans were promptly identified, with the necessary provisioning made. According to Rajan, this was crucial for alleviating the growing financial insecurity surrounding public sector banks. He recalled how he took his proposal for an AQR and the end of the moratorium on bad loans to Arun Jaitley, the then Finance Minister, who approved it without hesitation. This marked a turning point in the fight against NPAs. The Modi Government’s Response, A Shift in NPA Management: Rajan’s praise for the Modi government’s handling of NPAs aligns with recent updates from Finance Minister Nirmala Sitharaman. According to her, between 2014 and 2023, the government’s initiatives helped recover more than ₹10 lakh crores from bad loans. The gross NPA ratio fell to a 12-year low of 2.8 percent by the end of the fiscal year 2024. These figures are a direct reflection of the government’s ongoing efforts to manage bad loans and prevent further escalation of the NPA crisis. Rajan acknowledges that the implementation of AQR was a pivotal step. However, the Modi government’s broader policy initiatives played a crucial role in reducing NPAs over time. One of the most significant steps was the introduction of the Insolvency and Bankruptcy Code (IBC) in 2016. This law gave authorities the power to take control of defaulting companies from their promoters, thereby protecting the interests of creditors. Additionally, wilful defaulters were barred from participating in the resolution process, ensuring that there would be greater accountability. Additional Measures to Tackle NPAs: Alongside the IBC, the government took several other steps to address the NPA issue. One such measure was the amendment to the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act) of 2002, allowing banks to auction the assets of defaulters. This was complemented by the establishment of the National Asset Reconstruction Company Limited (NARCL) to resolve stressed assets over ₹500 crore. The government also provided a ₹30,600 crore guarantee to back NARCL’s receipts, further enhancing the efficiency of the recovery process. Public sector banks were also restructured through the establishment of Stressed Asset Management Verticals, such as the one in the State Bank of India (SBI), to manage and recover loans more effectively. These verticals allowed banks to monitor loans more closely, ensuring that any potential defaults were caught early.

Moreover, the RBI implemented a system of Early Warning Signals (EWS) to trigger timely remedial actions for loans at risk of default. A Positive Outlook: Rajan’s Acknowledgment: Raghuram Rajan’s acknowledgment of the Modi government’s success in reducing NPAs is notable, especially considering his earlier critiques. He conceded that the government’s approach, including the AQR, the IBC, and other reforms, helped set the stage for the reduction in bad loans. As he put it, “Eventually the situation is back on track,” signifying a recovery after years of financial distress. Rajan’s perspective carries weight given his experience and expertise in managing the Bharatiya economy, and his remarks add credibility to the government’s claims of progress. Conclusion: The Long Road Ahead: While the reduction in NPAs under the Modi government is a significant achievement, experts agree that the work is far from over. The underlying issues that contribute to the creation of bad loans—such as poor project planning, delays in clearances, and systemic corruption—continue to be challenges for Bharat’s banking sector. Therefore, while Rajan’s praise is deserved, it also highlights the complexity of tackling NPAs and the need for continued vigilance. The government’s strategy of combining regulatory reforms, legal frameworks, and institutional restructuring has certainly yielded results. Yet, with Bharat’s banking sector still grappling with certain vulnerabilities, it is essential to keep refining these measures. Raghuram Rajan’s shift in stance reflects a recognition of these efforts, providing a balanced view of the Modi government’s handling of one of the most significant financial challenges in Bharat’s economic history.   The post Raghuram Rajan’s Remark on Modi Government’s NPA Management: A Shift in Perspective appeared first on Global Governance News- Asia's First Bilingual News portal for Global News and Updates. [ad_2] Source link

[businessviewpointmag]

Retail Inflation Eases in November Amid Cooling Food Prices

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Source: economictimes.com

India’s retail inflation eased to 5.48% in November, down from 6.21% in October, marking a significant reduction after reaching a 14-month high. The decline was primarily driven by cooling food prices, with food inflation moderating to 9% in November compared to 10.9% in the previous month. Vegetable inflation, a key contributor to elevated consumer prices, dropped sharply from 42% in October to 29% in November. Excluding vegetables, overall inflation stood at 3.9%, comfortably below the Reserve Bank of India’s (RBI) lower threshold of 4%.

Rajani Sinha, Chief Economist at CareEdge, noted, “The moderation in vegetable prices played a crucial role in bringing down the inflation rate. The November data aligns with the projected 5.5% median forecast from various analysts.” Despite this decline, inflation remains above 5% for the third consecutive month, presenting challenges for the RBI as it navigates monetary policy decisions.

Policy Challenges Ahead

The persistent inflationary pressures pose a dilemma for the RBI’s Monetary Policy Committee (MPC), which maintained the policy rate unchanged for the 11th consecutive time during its December meeting. Experts predict inflation will remain above 5% in December, complicating decisions on interest rates in February 2025.

Madan Sabnavis, Chief Economist at Bank of Baroda, commented, “With India’s retail inflation expected around 5.4% in December, the central bank will face a tough call on rates in February. However, a higher base effect from categories like pulses, fruits, and spices may aid in further cooling inflation in early 2025.”

Paras Jasrai, Senior Analyst at India Ratings and Research, added that core inflation was largely stable at 3.6% in November. He emphasized that demand conditions are unlikely to change significantly through December, indicating a steady trajectory for core inflation in the near term.

The RBI has already revised its annual inflation forecast upward from 4.5% to 4.8% following October’s higher-than-expected reading. However, analysts remain optimistic about inflation easing further in 2025.

Food Prices and Future Trends

Despite overall improvements, certain food categories continued to exhibit high inflation rates in November. Potatoes recorded a staggering 66.6% inflation, up from 64.9% in October, while garlic inflation remained over 80%. Carrots and pulses also saw double-digit inflation, highlighting the uneven nature of price moderation.

The personal care and effects category, influenced by rising gold and silver prices, contributed to core inflation staying elevated in November. Experts suggest that favorable monsoon conditions and improved agricultural output could further stabilize food prices, supporting the RBI’s inflation management efforts.

Looking ahead, the Asian Development Bank forecasts consumer inflation to decline to 4.3% by FY26, down from its earlier projection of 4.5%. If headline inflation falls to 5% or lower by December 2024, economists anticipate the MPC may consider rate cuts in early 2025. Aditi Nayar, Chief Economist at ICRA, stated, “We expect two rate cuts of 25 basis points each in the upcoming easing cycle, contingent on continued moderation in inflation.”

As food prices stabilize and India’s retail inflation shows signs of further cooling, policymakers and consumers alike remain hopeful for sustained economic relief in the months ahead.

Did you find this article helpful? Visit more of our blogs! Business Viewpoint Magazine

[f2aditya]

RBI Monetary Policy Highlights

The Reserve Bank of India (RBI) held the repo rate steady at 6.5% in its December 6, 2024, monetary policy meeting, maintaining a neutral stance. To boost liquidity, the Cash Reserve Ratio (CRR) was cut by 50 basis points to 4%, releasing ₹1.16 lakh crore into the system. The FY25 GDP growth forecast was revised downward to 6.6% from 7.2%, while CPI inflation for FY25 was raised to 4.8% from 4.5%. Quarterly projections indicate slight moderation, with Q4FY25 GDP growth at 7.2% and inflation at 4.5%.

Key policy updates include an increase in the agricultural loan limit to ₹2 lakh and a framework for Responsible AI in Finance. The CRR reduction is expected to stabilize yields and address liquidity concerns. Market experts predict easing inflation and improved financial stability in the coming quarters. Read More :- https://www.linkedin.com/feed/update/urn:li:activity:7271011292130242560

[jarvis-invest]

Discover the latest RBI Monetary Policy updates, including key decisions on repo rates, inflation, liquidity management, and growth outlook. Learn how these changes impact sectors like banking, real estate, and AI-driven technology.

[kgsupsccourses]

Daily Current Affairs for UPSC - Stay Updated with KGS IAS

Staying updated with daily current affairs is essential for cracking the UPSC examination. With KGS IAS, we provide a streamlined approach to help you stay on top of the most relevant topics. Here’s a breakdown of today’s significant events that you need to know.

National News Highlights

The Indian government recently introduced a new economic policy aimed at strengthening the small and medium enterprises (SMEs) sector. This policy focuses on providing financial aid and infrastructure support to SMEs, promoting entrepreneurship. Candidates preparing for UPSC should focus on the potential impacts this policy might have on employment and economic growth.

In addition, the Supreme Court of India passed a landmark judgment on environmental protection, emphasizing stricter regulations for industries to reduce pollution levels. This is crucial for the Environment and Ecology portion of the UPSC syllabus.

International Relations Update

India and Japan held a bilateral meeting to discuss regional security and economic cooperation. The growing partnership between these two nations is pivotal for maintaining stability in the Indo-Pacific region. UPSC aspirants should pay attention to the strategic importance of this alliance and its relevance to India’s foreign policy.

The UN General Assembly also adopted a resolution on climate change, which India supported. This move underscores the country's commitment to global climate efforts. Understanding India's role in international organizations is vital for aspirants.

Economic Affairs and Finance

The Reserve Bank of India (RBI) recently made adjustments to the repo rate to control inflation. Monitoring the trends in India’s monetary policies will provide insights into the Indian Economy segment of the UPSC exam.

Additionally, a new report highlights that India's GDP growth is expected to rise in the coming quarter due to increased foreign investments. Aspirants should focus on understanding how these trends influence government spending and fiscal policies.

Science and Technology Developments

India successfully launched a new satellite aimed at improving communication networks across the country. The launch is significant for the advancement of telecommunication and digital services, which have been areas of major focus for the government.

For Science and Technology in UPSC, keep track of such technological advancements, especially those related to space exploration and digital transformation.

Environment and Ecology

The Ministry of Environment announced new conservation projects for endangered species in the Western Ghats. This initiative will focus on preserving biodiversity while promoting sustainable development in the region.

Understanding the balance between conservation efforts and development is critical for the Environment and Ecology section of the UPSC syllabus.

Conclusion

Daily current affairs play an essential role in shaping your preparation for the UPSC exam. By focusing on relevant national, international, economic, and environmental news, you can stay updated and ensure a comprehensive understanding of critical issues. Rely on KGS IAS for a detailed breakdown of daily news and events to boost your preparation and achieve success in the UPSC.

[avisionins]

Why Understanding Banking Topics Forms the Backbone of Success?

Introduction:

In today's competitive world, one needs to understand various banking topics if a candidate aspires to crack the banking exams. Be it the best banking coaching in Kolkata or self-study, a candidate who masters the basics of different types of banking concepts stands a better chance of succeeding at the exams.

The Base of Banking Exams

Banking exams test one's knowledge in financial systems, economic principles, and functioning banks. There will usually be sections on general awareness, quantitative aptitude, reasoning ability, and, most important of all, banking awareness. The banking awareness section will contain questions on monetary policies, banking regulations, the role of central banks, and new and emerging developments in the financial sector.

You have to understand these topics not just for the sake of the exam but also to comprehend your future role in banking. The role of the banker incorporates the management of financial transactions, understanding the economic indicators, reaching wise decisions. If you do not have a strong understanding of banking topics, you might find it hard to perform well in the career.

How Coaching Helps

For most aspirants, joining a coaching institute makes all the difference in one's preparation. Banking coaching in Kolkata aids by offering a systematic approach toward learning and aiding students with experienced faculty members, comprehensive study material, and regular mock tests. These resources help build a strong foundation in banking topics and ensure that they are well prepared for the exam.

The coaching institutes also provide individual guidance as to which sectors a student is good or bad at. This focused approach would allow him to spend more time on the section where he is weak, increasing the chances of his selection by many folds.

Key Banking Topics to Focus On

As mentioned earlier, a candidate should focus on topics that have frequently appeared in banking exams. These include:

Monetary Policy: Very important to understand how money supply and rate of interest has been managed by RBI. 

Banking Regulations: Regulations such as Basel norms, RBI model, anti money laundering are crucial to understand. The system can afford stability and safety with this process.

Financial Markets: The way in which financial markets, like stock exchanges, the bond market, and foreign exchange markets, operate has relevance in a finance context. Questions are asked to assess how a person understands the money flow in an economy.

Recent Developments: One stays updated with the latest happenings in the Banking industry, such as merger and acquisition, new financial products, and technology. These types of questions are asked many a time in the general awareness section.

The Role of Practice

While one has to understand the concepts related to banking, practice becomes equally important. Mock tests and practice papers help you in applying knowledge and improving speed and accuracy. They also enable one to get accustomed to the exam pattern. Many institute will come and go but the efforts of "Avision Coaching" is priceless because of its efforts, test series, question banks for practice and build confidence.

The role of the base banking coaching like "Avision Institute" sealed with top faculties to gain more knowledge and solve issues. Group studies and discussions are effective in deepening understanding and having more retention power in memory.

Conclusion:

The key to success in banking exams is a deep understanding of the topics of banking. Whether you're aiming at the best coaching for banking or doing it yourself, basic concepts along with recent developments will always give additional advantages. If you have the right knowledge and guidance, coupled with ample practice, then you can get much more than just clearing the exam--you will have a very successful career ahead in the banking industry.

[arena-nikita]

Predicting SRG Housing Finance Interest Rate Changes

In today's dynamic financial landscape, securing a home loan with a favorable interest rate is a top priority for many. SRG Housing Finance is a prominent player in the market, but will their interest rates change soon? This blog explores the factors that influence interest rate fluctuations and equips you with strategies to make informed decisions regarding your SRG Housing Finance loan.

Understanding Interest Rate Movement: A Complex Equation

Predicting the exact timing and direction of SRG Housing Finance rate of interest changes is challenging. Multiple factors contribute to this movement:

Macroeconomic Conditions: The overall health of the Indian economy, including inflation rates and GDP growth, significantly impacts interest rates. A strong economy often leads to higher interest rates, while a slowdown might trigger reductions.

RBI Monetary Policy: The Reserve Bank of India (RBI) plays a critical role in regulating interest rates. The RBI's repo rate, the rate at which it lends to banks, directly influences lending rates offered by institutions like SRG Housing Finance.

Liquidity in the Banking System: The availability of funds in the banking system impacts interest rates. When there's ample liquidity, interest rates tend to be lower, and vice versa.

Competition in the Housing Finance Market: The competitiveness of the housing finance market plays a role. If other lenders offer significantly lower rates, SRG Housing Finance might have to adjust their rates to remain competitive.

Limited Predictive Power: Transparency is Key

While predicting specific interest rate changes is difficult, SRG Housing Finance prioritizes transparency. Here's what you can do:

Review SRG Housing Finance Policy Documents: SRG Housing Finance outlines its interest rate setting process and review schedule in their policy documents, publicly. This document specifies that the interest rate models, base rate, and other charges are reviewed periodically by their Asset Liability Management Committee (ALCO) with recommendations made to the Board. The date of the last board meeting reviewing these rates is also usually mentioned in the document. By staying updated on the latest board meeting dates and reviewing these policy documents, you can gain insights into potential upcoming reviews that might lead to interest rate adjustments.

Monitor Industry Trends: Keep yourself informed about broader economic trends, RBI policy announcements, and movements in interest rates offered by other housing finance companies. This awareness equips you to make informed decisions about your SRG Housing Finance loan.

Strategies to Secure a Favorable Rate:

Even with potential future changes, here's how you can position yourself for a favorable SRG Housing Finance interest rate:

Maintain a High Credit Score: A strong credit score significantly increases your chances of securing a lower interest rate.

Negotiate Terms: While interest rates might be predetermined, explore negotiating processing fees or other charges with SRG Housing Finance, especially if you have a strong credit score or a sizable down payment.

Compare with Other Lenders: Don't limit yourself to SRG Housing Finance. Research and compare interest rates offered by other lenders in the market. This empowers you to choose the most competitive option available.

Consider a Fixed or Floating Rate Loan: SRG Housing Finance might offer fixed and floating-rate loan options. Evaluate your risk tolerance and choose the option that best aligns with your financial goals and market predictions.

Conclusion

Predicting the exact timing and direction of SRG Housing Finance interest rate changes is challenging. However, by understanding the influencing factors, staying informed, and employing strategic planning, you can make well-rounded decisions. Remember, a strong credit score, negotiating skills, and comparing loan options empower you to secure the most favorable SRG Housing Finance interest rate for your home loan needs. So, stay informed, explore your options, and embark on your homeownership journey with confidence!

[best-news-report]

Stay informed on the latest updates and insights into the RBI Monetary Policy 2024. Explore key decisions, market impacts, and economic forecasts from the Reserve Bank of Indias latest monetary policy announcement.

[news365timesindia]

[ad_1] Paromita Das GG News Bureau New Delhi, 24th Dec. A Reversal of Opinions Raghuram Rajan, the former Governor of the Reserve Bank of India (RBI), has been a vocal critic of the Modi government during his tenure at the central bank. His frequent disagreements with the government, particularly over monetary policies and handling of the economy, earned him the tag of being a “darling of the opposition.” However, in a surprising turn of events, Rajan recently lauded the Modi administration for its effective management of Non-Performing Assets (NPAs), a key challenge for the Bharatiya banking system. This unexpected praise comes after years of sharp criticisms and is worthy of scrutiny, considering Rajan’s pivotal role in the banking reforms during his tenure at RBI. Understanding the NPA Crisis: The Historical Context: To comprehend the significance of Rajan’s recent remarks, it is essential to revisit the context of Bharat’s NPA crisis. NPAs are loans that have gone unpaid for an extended period, and their rise in the Bharatiya banking system has been a long-standing issue, primarily beginning after the global financial crisis of 2008. Rajan noted that projects funded by banks before the crisis started facing significant setbacks post-2008 due to factors such as corruption, delays in permits, and mismanagement. These factors caused a steep rise in NPAs, especially in public sector banks. Rajan’s 2015 Asset Quality Review (AQR) was a watershed moment in addressing this crisis. The AQR helped to clean up the balance sheets of banks by ensuring that bad loans were promptly identified, with the necessary provisioning made. According to Rajan, this was crucial for alleviating the growing financial insecurity surrounding public sector banks. He recalled how he took his proposal for an AQR and the end of the moratorium on bad loans to Arun Jaitley, the then Finance Minister, who approved it without hesitation. This marked a turning point in the fight against NPAs. The Modi Government’s Response, A Shift in NPA Management: Rajan’s praise for the Modi government’s handling of NPAs aligns with recent updates from Finance Minister Nirmala Sitharaman. According to her, between 2014 and 2023, the government’s initiatives helped recover more than ₹10 lakh crores from bad loans. The gross NPA ratio fell to a 12-year low of 2.8 percent by the end of the fiscal year 2024. These figures are a direct reflection of the government’s ongoing efforts to manage bad loans and prevent further escalation of the NPA crisis. Rajan acknowledges that the implementation of AQR was a pivotal step. However, the Modi government’s broader policy initiatives played a crucial role in reducing NPAs over time. One of the most significant steps was the introduction of the Insolvency and Bankruptcy Code (IBC) in 2016. This law gave authorities the power to take control of defaulting companies from their promoters, thereby protecting the interests of creditors. Additionally, wilful defaulters were barred from participating in the resolution process, ensuring that there would be greater accountability. Additional Measures to Tackle NPAs: Alongside the IBC, the government took several other steps to address the NPA issue. One such measure was the amendment to the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act) of 2002, allowing banks to auction the assets of defaulters. This was complemented by the establishment of the National Asset Reconstruction Company Limited (NARCL) to resolve stressed assets over ₹500 crore. The government also provided a ₹30,600 crore guarantee to back NARCL’s receipts, further enhancing the efficiency of the recovery process. Public sector banks were also restructured through the establishment of Stressed Asset Management Verticals, such as the one in the State Bank of India (SBI), to manage and recover loans more effectively. These verticals allowed banks to monitor loans more closely, ensuring that any potential defaults were caught early.

Moreover, the RBI implemented a system of Early Warning Signals (EWS) to trigger timely remedial actions for loans at risk of default. A Positive Outlook: Rajan’s Acknowledgment: Raghuram Rajan’s acknowledgment of the Modi government’s success in reducing NPAs is notable, especially considering his earlier critiques. He conceded that the government’s approach, including the AQR, the IBC, and other reforms, helped set the stage for the reduction in bad loans. As he put it, “Eventually the situation is back on track,” signifying a recovery after years of financial distress. Rajan’s perspective carries weight given his experience and expertise in managing the Bharatiya economy, and his remarks add credibility to the government’s claims of progress. Conclusion: The Long Road Ahead: While the reduction in NPAs under the Modi government is a significant achievement, experts agree that the work is far from over. The underlying issues that contribute to the creation of bad loans—such as poor project planning, delays in clearances, and systemic corruption—continue to be challenges for Bharat’s banking sector. Therefore, while Rajan’s praise is deserved, it also highlights the complexity of tackling NPAs and the need for continued vigilance. The government’s strategy of combining regulatory reforms, legal frameworks, and institutional restructuring has certainly yielded results. Yet, with Bharat’s banking sector still grappling with certain vulnerabilities, it is essential to keep refining these measures. Raghuram Rajan’s shift in stance reflects a recognition of these efforts, providing a balanced view of the Modi government’s handling of one of the most significant financial challenges in Bharat’s economic history. The post Raghuram Rajan’s Remark on Modi Government’s NPA Management: A Shift in Perspective appeared first on Global Governance News- Asia's First Bilingual News portal for Global News and Updates. [ad_2] Source link

[news365times]

[ad_1] Paromita Das GG News Bureau New Delhi, 24th Dec. A Reversal of Opinions Raghuram Rajan, the former Governor of the Reserve Bank of India (RBI), has been a vocal critic of the Modi government during his tenure at the central bank. His frequent disagreements with the government, particularly over monetary policies and handling of the economy, earned him the tag of being a “darling of the opposition.” However, in a surprising turn of events, Rajan recently lauded the Modi administration for its effective management of Non-Performing Assets (NPAs), a key challenge for the Bharatiya banking system. This unexpected praise comes after years of sharp criticisms and is worthy of scrutiny, considering Rajan’s pivotal role in the banking reforms during his tenure at RBI. Understanding the NPA Crisis: The Historical Context: To comprehend the significance of Rajan’s recent remarks, it is essential to revisit the context of Bharat’s NPA crisis. NPAs are loans that have gone unpaid for an extended period, and their rise in the Bharatiya banking system has been a long-standing issue, primarily beginning after the global financial crisis of 2008. Rajan noted that projects funded by banks before the crisis started facing significant setbacks post-2008 due to factors such as corruption, delays in permits, and mismanagement. These factors caused a steep rise in NPAs, especially in public sector banks. Rajan’s 2015 Asset Quality Review (AQR) was a watershed moment in addressing this crisis. The AQR helped to clean up the balance sheets of banks by ensuring that bad loans were promptly identified, with the necessary provisioning made. According to Rajan, this was crucial for alleviating the growing financial insecurity surrounding public sector banks. He recalled how he took his proposal for an AQR and the end of the moratorium on bad loans to Arun Jaitley, the then Finance Minister, who approved it without hesitation. This marked a turning point in the fight against NPAs. The Modi Government’s Response, A Shift in NPA Management: Rajan’s praise for the Modi government’s handling of NPAs aligns with recent updates from Finance Minister Nirmala Sitharaman. According to her, between 2014 and 2023, the government’s initiatives helped recover more than ₹10 lakh crores from bad loans. The gross NPA ratio fell to a 12-year low of 2.8 percent by the end of the fiscal year 2024. These figures are a direct reflection of the government’s ongoing efforts to manage bad loans and prevent further escalation of the NPA crisis. Rajan acknowledges that the implementation of AQR was a pivotal step. However, the Modi government’s broader policy initiatives played a crucial role in reducing NPAs over time. One of the most significant steps was the introduction of the Insolvency and Bankruptcy Code (IBC) in 2016. This law gave authorities the power to take control of defaulting companies from their promoters, thereby protecting the interests of creditors. Additionally, wilful defaulters were barred from participating in the resolution process, ensuring that there would be greater accountability. Additional Measures to Tackle NPAs: Alongside the IBC, the government took several other steps to address the NPA issue. One such measure was the amendment to the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act) of 2002, allowing banks to auction the assets of defaulters. This was complemented by the establishment of the National Asset Reconstruction Company Limited (NARCL) to resolve stressed assets over ₹500 crore. The government also provided a ₹30,600 crore guarantee to back NARCL’s receipts, further enhancing the efficiency of the recovery process. Public sector banks were also restructured through the establishment of Stressed Asset Management Verticals, such as the one in the State Bank of India (SBI), to manage and recover loans more effectively. These verticals allowed banks to monitor loans more closely, ensuring that any potential defaults were caught early.

Moreover, the RBI implemented a system of Early Warning Signals (EWS) to trigger timely remedial actions for loans at risk of default. A Positive Outlook: Rajan’s Acknowledgment: Raghuram Rajan’s acknowledgment of the Modi government’s success in reducing NPAs is notable, especially considering his earlier critiques. He conceded that the government’s approach, including the AQR, the IBC, and other reforms, helped set the stage for the reduction in bad loans. As he put it, “Eventually the situation is back on track,” signifying a recovery after years of financial distress. Rajan’s perspective carries weight given his experience and expertise in managing the Bharatiya economy, and his remarks add credibility to the government’s claims of progress. Conclusion: The Long Road Ahead: While the reduction in NPAs under the Modi government is a significant achievement, experts agree that the work is far from over. The underlying issues that contribute to the creation of bad loans—such as poor project planning, delays in clearances, and systemic corruption—continue to be challenges for Bharat’s banking sector. Therefore, while Rajan’s praise is deserved, it also highlights the complexity of tackling NPAs and the need for continued vigilance. The government’s strategy of combining regulatory reforms, legal frameworks, and institutional restructuring has certainly yielded results. Yet, with Bharat’s banking sector still grappling with certain vulnerabilities, it is essential to keep refining these measures. Raghuram Rajan’s shift in stance reflects a recognition of these efforts, providing a balanced view of the Modi government’s handling of one of the most significant financial challenges in Bharat’s economic history. The post Raghuram Rajan’s Remark on Modi Government’s NPA Management: A Shift in Perspective appeared first on Global Governance News- Asia's First Bilingual News portal for Global News and Updates. [ad_2] Source link

[sanjana-s]

RBI Monetary Policy updates - Repo rate unchanged at 6.50%

The Reserve Bank of India's Monetary Policy Committee (MPC) recently announced its decision to maintain key interest rates at 6.50%, aligning with market expectations. The policy stance remains at 'withdrawal of accommodation', indicating a cautious approach towards economic support measures.

The MPC's decision was supported by a 5:1 majority vote, highlighting a broad consensus among members. This move was largely anticipated by economists and experts, who welcomed the decision as a prudent step by the central bank.

Economists believe that the RBI has ample room to keep the repo rate unchanged, especially given the robust GDP growth forecast of 7% for FY25. This strong growth outlook, coupled with the central bank's commitment to targeting a 4% inflation rate, suggests that any future rate cuts are likely to be gradual and measured.

However, analysts point out that the timing of rate cuts may be influenced by external factors, such as the US Federal Reserve's (Fed) monetary policy stance. Many expect that the RBI will wait for the Fed to initiate its rate cut cycle before considering similar actions in India.

Looking ahead, the RBI's focus on financial stability is expected to remain paramount. This could mean that in certain circumstances, ensuring stability in the financial system may take precedence over managing inflation.

The GDP growth forecast for FY25, pegged at 7%, reflects the RBI's confidence in the economy's resilience and recovery. Growth projections for the June and September quarters stand at 7% and 6.9% respectively, with expectations of sustained growth momentum in the third and fourth quarters as well.

The MPC's decision to maintain status quo on policy rates and stances in its last review meeting, held in February 2024, underscores the central bank's commitment to a cautious and balanced approach towards monetary policy.

In conclusion, the RBI's decision to keep key rates unchanged reflects a balanced assessment of the current economic landscape, with an eye towards supporting growth while ensuring financial stability. The central bank's future actions are likely to be guided by a combination of domestic economic indicators and global developments, particularly the trajectory of the US Fed's monetary policy.

[divisional-news]

Expectations for RBI's First FY25 Meeting: Likely Reasons for Keeping Repo Rate Unchanged

As the Reserve Bank of India (RBI) gears up for its first Monetary Policy Committee (MPC) meeting of the financial year 2024-25 in April, all eyes are on the potential decisions regarding the repo rate and monetary policy stance. Here's a breakdown of what to expect and why the central bank may opt to maintain the status quo.

Forecast and Outlook: Deutsche Bank's projections suggest that the RBI might uphold its FY25 CPI inflation forecast at 4.5%, while possibly revising upward the growth forecast for the next fiscal year to 7.4% from the current 7%.

Steady Repo Rate Anticipated: Market analysts widely predict that the MPC will choose to keep the repo rate unchanged at 6.5%. This expectation is grounded in the backdrop of seven consecutive meetings where the rate has remained stagnant following a 25-basis point hike in February 2023.

Cautionary Approach: The RBI is likely to exercise caution due to persistent risks to food inflation, which could have repercussions on the consumer price index (CPI) or retail inflation. The mandate to maintain inflation at 4% with a comfort band of 2% in both directions necessitates a vigilant stance until durable achievement of the target.

Monetary Policy Stance: While the prevailing stance of 'withdrawal of accommodation' is expected to persist, there's speculation among analysts about a potential shift to a 'neutral' stance. This adjustment could hinge on various factors, including past instances of RBI's surprising decisions.

Projections and Forecasts: Deutsche Bank's projections indicate a likely unchanged CPI inflation forecast for FY25 at 4.5%, while the growth forecast for the next fiscal year might witness an upward revision to 7.4%. These estimates provide insights into the RBI's outlook on the economic trajectory.

Impact on Lending Rates: In the event of an unchanged repo rate, lending rates linked to external benchmark lending rates (EBLR) will likely remain stable, offering relief to borrowers. However, there might be a possibility of interest rate adjustments on loans linked to the marginal cost of fund-based lending rate (MCLR).

Future Rate Cuts: Forecasts by Goldman Sachs suggest potential rate cuts of 25 basis points each in the third and fourth quarters of the 2024 calendar year, indicating a forward-looking approach by the central bank.

As the financial landscape evolves, the decisions taken by the RBI during its upcoming meeting will have far-reaching implications for various stakeholders. Stay tuned for updates on the monetary policy trajectory and its impact on the economic landscape.

[kgsupsccourses]

Daily Current Affairs: BPSC

Keeping up with daily current affairs is crucial for aspiring candidates of the Bihar Public Service Commission (BPSC) examinations. The BPSC exam, which assesses knowledge in various domains including general knowledge, current affairs, and history, requires candidates to stay updated with the latest developments. Here’s a roundup of today’s important current affairs that could impact BPSC preparation.

1. National Politics:

In recent developments, India’s central government has announced new reforms aimed at enhancing transparency in public procurement. This move is expected to streamline the procurement process, reduce corruption, and ensure more efficient use of public funds. For BPSC candidates, understanding the implications of such reforms on governance and administrative practices is essential.

2. Economic Updates:

Today, the Reserve Bank of India (RBI) released its latest monetary policy report. The report highlights a modest increase in the GDP growth forecast for the fiscal year, driven by strong performance in the services and manufacturing sectors. The RBI's stance on inflation control and interest rates is particularly significant, as it influences economic stability and growth. Candidates should be familiar with these economic indicators and their impact on regional and national development.

3. Environmental Issues:

A recent UN report has raised concerns about the accelerating effects of climate change on South Asia, including India. The report underscores the urgent need for enhanced climate action and sustainable practices. For the BPSC exam, candidates should be aware of India’s environmental policies and international climate commitments, as these are critical to understanding the broader socio-economic context.

4. Social Issues:

The Indian government has launched a new initiative aimed at improving literacy rates in rural areas of Bihar. This program focuses on adult education and skill development, addressing significant gaps in educational attainment. Candidates should consider the implications of such initiatives on social development and public administration, particularly within the context of Bihar.

5. International Relations:

In international news, India has strengthened its bilateral relations with a neighboring country through a new trade agreement. This agreement is expected to boost economic ties and regional cooperation. Understanding the dynamics of international trade agreements and their impact on India’s foreign policy is important for BPSC candidates.

6. Local News:

In Bihar, the state government has introduced new infrastructure projects aimed at improving transportation and connectivity. These projects are expected to enhance economic development and regional integration. Staying informed about local developments can provide insights into the state's administrative priorities and challenges.

In summary, staying abreast of daily current affairs is essential for BPSC candidates to build a comprehensive understanding of national and international issues, economic trends, environmental challenges, and local developments. Regularly updating your knowledge base will not only aid in examination preparation but also enhance your overall analytical skills.

[thelikenews]

RBI MPC August 2023 Meeting LIVE: UPI Lite Transaction Limit Increased, Offline Payments on the Horizon, Announces Shaktikanta Das

In a significant development that will impact the digital payment landscape, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) convened in August 2023 to make some major announcements. The most notable among these is the decision to raise the transaction limit on UPI Lite, a move that aims to empower users and enhance the convenience of digital transactions. The decision, which comes amidst the ongoing efforts to promote a cashless economy, is expected to make UPI Lite even more accessible to a larger segment of the population. UPI Lite has already gained popularity for its simplicity and ease of use, and the increased transaction limit is likely to boost its adoption further. Speaking at the live updates session of the RBI MPC meeting, Shaktikanta Das, the RBI Governor, emphasized the importance of this decision. He stated, "The increased transaction limit on UPI Lite is a significant step towards fostering a digital payments ecosystem that is inclusive and efficient. This move aligns with our vision of a less-cash society, where digital transactions become the norm. Post Monetary Policy Press Conference by Shri Shaktikanta Das, RBI Governor- August 10, 2023 https://t.co/a6SE9WdApa — ReserveBankOfIndia (@RBI) August 10, 2023 The exact details of the revised transaction limit have yet to be disclosed, but it is anticipated that the new limit will enable users to conduct higher-value transactions through UPI Lite, providing more flexibility for a range of financial activities. Furthermore, Governor Das also shared exciting news regarding the introduction of offline payments. This feature is expected to revolutionize the digital payment landscape by allowing users to perform transactions even in areas with limited or intermittent internet connectivity. This move holds immense potential, especially for rural and remote areas, where a stable internet connection can be a challenge. While the specifics of the offline payment mechanism are yet to be unveiled, the mere announcement of its introduction has generated significant anticipation among businesses, consumers, and digital payment service providers.

RBI MPC August 2023 Meeting LIVE: Shri Shaktikanta Das, RBI Governor The combination of the increased UPI Lite transaction limit and the forthcoming offline payments feature is poised to bring about a transformative change in the way Indians transact digitally. It underlines the RBI's commitment to creating an environment where digital financial services are not just convenient but also accessible to all, regardless of their location or connectivity constraints. The financial and technological sectors will undoubtedly closely monitor the implementation of these changes, as they are likely to have a far-reaching impact on the country's economy and digital payments ecosystem. As we await further details, one thing is clear: the RBI's August 2023 MPC meeting has set the stage for a new era in digital payments, one that is more inclusive, efficient, and adaptable to the needs of a diverse population. Click for more updates and latest Trending news along with Entertainment updates. Also get latest news and top headlines from India and around the world at The Like News. Read the full article