Skip to main content

For money don’t huddle RBI to banks

By
Space out when raising funds; Sebi mulling securitisation platform’
In a bid to avoid crowding the market, the Reserve Bank of India ( RBI) has suggested that banks should not come altogether to raise capital from the market; they can probably consult each other to decide upon the timing to raise fresh capital from the market.
"What we are telling banks is that simultaneously all of them shouldnt be coming together. Then there will be a problem. There should be a proper sequence for it. These are the strategies they can adopt," said RGandhi, RBI deputy governor, at the India Securitisation Summit organised by the National Institute of Securities Markets ( NISM).
Every additional capital investment from the government was always welcome for public sector banks ( PSBs), he added. " We have been guiding the banks and others also for the next five years to compile the full requirement of BaselIII where large amount of capital is required. What we are suggesting is that it should be well in advance if banks are able to shore up their capital," he said.
For banks, there are a variety of methods available to boost their capital needs and according to Gandhi, raising capital for banks wasnt a concern. Banks were probably waiting for the right timing when it came to the price they would have to pay to raise capital.
Gandhi also said the Securities and Exchange Board of India ( Sebi) was examining the prospects of setting up a trading and reporting platform where all securitisation transactions would be reported and acentral data repository would be available to the securitisation market participants.
"Insurance Regulatory and Development and Authority of India ( Irdai) and Pension Fund Regulatory and Development Authority ( PFRDA) have been requested to look into their roles and regulations to facilitate long- term investments by insurance and pension funds in the securitised products. RBI will always be ready to review its own guidelines on an ongoing basis," he said.
The Indian securitisation market, which breached a high of Rs.63,730 crore in March 2008, has dwindled to Rs.28,800 crore as of March 2014, said Gandhi adding that the appetite for securitisation in India had been on the lower side. When asked about consolidation, wherein weaker banks would merge with larger ones, Gandhi said suggestions of such moves were always on and he believed it should be a commercial decision rather than driven by rules.
Business Standard, New Delhi, 15th July 2015 

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more