GOVERNOR STAYS IN HIS COMFORT ZONE
Raghuram Rajan stands fast despite pressure from government and industry leaders; announces several measures to ease banking; wilful defaulters norms may get tighter
LENDING RATES
8%
The repo rate — the key lending rate at which banks borrow from the central bank
WHAT IT MEANS An unchanged repo rate means EMIs remain high in the short-term Rate cut only if inflation does not rise Rate unchanged in four successive policies
MORE FUNDS
2
In percentage points, the cut in statutory liquidity ratio (SLR) securities of HTM category to 22% of deposits by September 2015 in a staggered manner
WHAT IT MEANS SLR is the proportion of deposits that banks have to set aside in bonds The mandatory SLR in govt bonds is currently fixed at 22% of total deposits HTM or held-to-maturity is a type of debt that banks must hold till maturity, forcing them to incur nominal losses A cut in HTM is aimed at spurring banks to lend more and boost investment
RECOVERY PROSPECTS
5.5%
RBI’s estimates of India’s GDP growth in 2014-15
6.3%
RBI’s estimates of India’s GDP growth in 2015-16 Speedy implementation of stalled projects key to sustaining recovery Export growth could pick up as world trade gathers momentum
PRICE WORRIES
8%
RBI’s retail inflation target by January 2015; it is 6% for January 2016 Farm sector outlook clouded by forecast of insufficient monsoon Food and fuel inflation may have a knock-on effect on other goods’ prices
KNOWN UNKNOWNS
Emerging markets remain vulnerable to changes in the US monetary policy Escalation of geo-political tensions can push up oil prices and fan inflation
EASIER CUSTOMER RULES
Banks’ ‘know your customer’ (KYC) procedure further simplified Banks cannot insist on physical presence of customer at the time of periodic updates Banks can’t seek fresh proof of identity and address at the time of periodic updates in case of no change in status for ‘low risk’ customers Banks will have to allow self-certification; accept a certified copy of the document by mail/post, etc Banks cannot seek fresh documents if an existing KYC compliant customer of a bank desires to open another account in the bank
MORE BANKS
Final guidelines for small and payments banks, which can accept deposits but cannot give loans, to be issued by Nov RBI mulling changes in definition of ‘wilful defaulter’ to include role of company directors in the case of a loan default Wilful defaulters are those who are not repaying loans despite having the capacity
to do so