| Interest rates on NRE rupee deposits |
| Interest rate cap on non-resident (external) rupee deposits for one to three years maturity hiked from 75 basis points above LIBOR/SWAP rates for US dollar of corresponding maturity to 100 basis points above LIBOR/SWAP rates for US dollar of corresponding maturity with immediate effect. |
| When issued market |
| In order to further strengthen the debt management framework, introduction of a 'when issued' (WI) market in government securities proposed. Guidelines covering permissible categories of securities and participants, surveillance system, limits on positions, internal control and reporting requirements are being issued separately. |
| Diversification of primary dealer business |
| Primary dealers allowed to diversify their activities as considered appropriate, in addition to their core business of government securities, subject to limits. |
| New WMA arrangements for Centre |
| A revised arrangement for ways and means advances (WMA) to the Government of India for the fiscal year 2006-07 is being put in place in consultation with the Government. As per the arrangement, the WMA limits would be fixed on a quarterly basis against the current practice of half-yearly basis. |
| Consolidation of gilts |
| There is a need to enlarge the number of actively traded central government securities in order to enhance liquidity and improve pricing in the market. The plan is to build up large volumes of liquid securities. |
| Identified illiquid securities will be bought from the secondary market by the Reserve Bank and once a critical amount of securities is acquired, they would be bought back by the government to extinguish the stock. |
| MFs allowed to participate in NDS |
| Mutual funds, which are NDS members, allowed to access the NDS-OM module with immediate effect. Other MFs would be permitted access by opening temporary current/SGL accounts with the Reserve Bank. |
| Large pension/provident funds like CBOT/Seamens'/Coal Miners' funds allowed to access the NDS-OM module by opening temporary current/SGL accounts with the Reserve Bank. The smaller funds would be allowed access through the CSGL route. |
| State government borrowing |
| State governments encouraged to progressively increase the share of market borrowings under the auction route. The state governments being encouraged to develop an advance indicative open market borrowing calendar. |
| Panel on borrowing |
| A Standing Technical Committee (STC) being set up under the aegis of the state finance secretaries conference with representation from the central and state governments and the Reserve Bank to advise on the wide-ranging issues relating to the borrowing programmes of central and state governments through a consensual and co-operative approach. |
| Panel on corporate bond |
| A working group being set up to examine the recommendations of the High Level Expert Committee on Corporate Bonds and Securitisation, chaired by RH Patil, and suggest a roadmap for implementation. SEBI and IRDA will be consulted. The Patil panel was appointed to examine legal, regulatory, tax and market design issues in the development of the corporate bond market. |
| Export proceeds |
| At present, the authorised dealers (ADs) are allowed to extend the time limit for realisation of export proceeds beyond the prescribed period of six months up to an invoice value of $ 100,000. As a measure of liberalisation, it is proposed that ADs could grant extension of time to realise export proceeds up to US $ 1 million beyond the prescribed period of six months. |
| Remittances abroad |
| ADs are permitted to remit initial and recurring expenses of the branch office of an Indian entity abroad up to 2 per cent and 1 per cent of the average annual sales/income or turnover during the last two accounting years, respectively. |
| As a measure of further liberalisation and simplification, ADs would, henceforth, allow remittances towards initial and recurring expenses of branch offices of Indian entities up to 10 per cent and 5 per cent of the average annual sales/income or turnover during the last two accounting years, respectively. |
| Working group on NRI remittances |
| Concerns have been expressed on the relatively high cost that can be faced, particularly by migrants wishing to send small amounts back to families. |
| A committee is examining the cost structure for each element of the value chain to suggest measures to reduce the cost and make remittance business more efficient. The group is expected to submit its report by end-May 2006. |
| Advisory group on FEMA |
| An advisory group (chairman: Mohandas Pai) being set up to review all foreign exchange regulations relating to services and make appropriate suggestions for further clarification or simplification and prepare a compendium of all foreign exchange regulations that apply to the services sector. |
| Cheap firm credit |
| The Union Budget announced a scheme providing short-term credit to farmers at 7 per cent per annum with a view to providing some relief to farmers through fiscal measures rather than cross-subsidisation within the banking sector. The Reserve Bank has commenced implementation of the budget measures, while ensuring the commercial viability of banks and the overall soundness of the credit system. |
| Relief measures for distressed farmers |
| A working group being constituted to suggest measures for assisting distressed farmers, including provision of financial counselling services and introduction of a specific Credit Guarantee Scheme under the DICGC Act for such farmers. |
| Regional Rural Banks |
| Sponsor banks have been encouraged to merge the RRBs sponsored by them state-wise in order to strengthen them. The government has so far issued notifications providing for amalgamation of 93 RRBs into 27 new RRBs, sponsored by 15 banks in 12 states. Further proposals for amalgamation of 36 RRBs into 13 new RRBs are under consideration. RBI proposes to permit RRBs to open/shift offices after obtaining clearances. |
| Preference Shares |
| The Basel I framework recognises issue of preference shares as an eligible instrument of capital. Although nationalised banks are able to raise capital through public issue of preference shares, there are restrictions on other banks. Necessary legal amendments proposed to enable all banks in India to avail of this option for raising capital. |
| Protected disclosures |
| As private sector and foreign banks are outside the purview of the CVC, a scheme being formulated called "Protected Disclosures Scheme for Private Sector and Foreign Banks". The draft of the proposed scheme has been placed on the Reserve Bank's website on January 25, 2006 soliciting suggestions from the public. |
| Prudential norms for new advances |
| In August 2001, an institutional mechanism was put in place for restructuring of corporate debt in the form of the Corporate Debt Restructuring (CDR) system. As banks would need to restructure credit facilities pertaining to borrowers who are not covered by CDR, a working group is being constituted to review and align the existing guidelines on restructuring of advances (other than under CDR mechanism). |
| Technical group on money lending |
| The AIl India Debt and Investment Survey (NSS Fifty-Ninth Round) has revealed that the share of money lenders in total dues of rural households has increased from 17.5 per cent in 1991 to 29.6 per cent in 2002. |
| Considering that high indebtedness to money lenders can be an important reason for distress of farmers, a technical group being set up to review the efficacy of the existing legislative framework governing money lending. |
Top Section
Explore Business Standard