Financially sound and well managed scheduled urban co-operative banks allowed to issue credit cards
The Reserve Bank of India (RBI) has announced various development and regulatory measure in its first bi-monthly monetary policy review.Banking system
* The Reserve Bank proposes to issue draft guidelines on Net Stable Funding Ratio (NSFR) by 15 May 2015.
* Guidelines on Counter-cyclical Capital Buffers (CCCB) were issued on 05 February 2015, envisaging the credit-to-GDP gap as the main indicator which may be used in conjunction with other supplementary indicators such as the incremental credit-deposit (C-D) ratio for a moving period of three years, the industrial outlook survey (IOS) assessment index and the interest coverage ratio. it was concluded that the overall situation does not warrant imposition of CCCB at this point of time.
* Banks allowed to invest in long term bonds issued by other banks
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* In order to improve the efficiency of monetary policy transmission, the Reserve Bank will encourage banks to move in a time-bound manner to marginal-cost-of-funds-based determination of their Base Rate.
* The Financial Benchmarks India Pvt. Ltd, after starting operations by end-May 2015, will be publishing various indices of market interest rates, Bank will be encouraged to use the indices as an external benchmark for pricing bank products.
* It is proposed to do away with the mandatory calendar of reviews by the boards of banks and instead, replace it with the seven critical themes prescribed by the Nayak Committee namely, business strategy, financial reports and their integrity, risk, compliance, customer protection, financial inclusion and human resources, and leave it to the banks' boards to determine other list of items to be deliberated and periodicity thereof.
* It is proposed to issue guidelines to private sector banks on a policy on remuneration for the non-executive directors (other than part-time Chairman)
* It is proposed to discuss with the Government the adoption of a similar remuneration policy for the non-executive directors of the public sector banks.
* It has been decided to allow financially sound and well managed (FSWM) scheduled urban co-operative banks, which are CBS-enabled and having minimum net worth of Rs 100 crore, to issue credit cards.
* It has been decided to permit state co-operative banks satisfying certain eligibility criteria to set up off-site ATMs/mobile ATMs without obtaining prior approval from the Reserve Bank.
Financial Markets
* As part of continuing measures to promote liquidity in the G-sec market, the Reserve Bank will formulate a scheme for market making by primary dealers in semi-liquid and illiquid government securities.
* It is proposed to introduce web-based solution for participation of all mid-segment / retail investors having gilt accounts on the e-Kuber platform within the next three months.
* Retail investors/individuals could be provided direct access to both primary and secondary G-secs market platforms without any intermediary. Hence, it is proposed to explore the creation of alternate channels of distribution (e-Distribution Channels) for G-secs by the Reserve Bank.
* It has also been decided to provide demat account holders a functionality to put through trades on NDS-OM. As
* It is proposed to allow non-competitive bidding facility in Treasury Bills to individuals as well.
* It is proposed to expand, in consultation with the Government of India, the scope of rupee bonds issues by the international financial institutions.
* For encouraging hedging of forex exposures and enhancing the liquidity of the currency options market, it is proposed to permit Indian exporters and importers to write covered options on the basis of actual contracted forex exposure.
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