Money & Banking

What’s new: Space for attracting more debt flows

Our Bureau | Updated on: May 23, 2022

Mirzapur: People wait for transactions at a bank in Mirzapur on Wednesday. PTI Photo (PTI12_14_2016_000180B) | Photo Credit: PTI

The estimated threshold level is higher in the range between 23 per cent and 24 per cent of GDP

 

India has space for attracting more debt flows of the order of $90 billion, according to an article in RBI’s latest monthly bulletin. The empirical results of a study on the “growth maximising external debt of India” suggest that as against India’s current external debt to GDP ratio of 20 per cent, the estimated threshold level is higher in the range between 23 per cent and 24 per cent of GDP. “Given the risk of amplifying external vulnerabilities because of higher exposure to external debt, the estimated space may be used carefully balancing the objective of growth and macro-stability,” senior RBI officials Gopinath Tulasi and Thangjam Rajeshwar Singh, said in the article. 

Surplus transfer to Government

The Reserve Bank of India’s (RBI) Board approved a sharply lower surplus transfer of ₹30,307 crore to the government for the accounting year 2021-22, the lowest in 10 years. This is in sharp contrast to the surplus transfer of ₹99,122 crore for nine months ended March 31, 2021 (July 2020-March 2021). The lower surplus transfer is due to RBI’s absorption of huge amount of liquidity from banks under the reverse repo windows and paying interest to them. The contingency risk buffer (CRB) has been maintained at 5.50 per cent (of RBI’s balance sheet), according to an RBI statement. CRB is the country’s savings for a ‘rainy day’ (a financial stability crisis) which has been consciously maintained with RBI in view of its role as lender of last resort. 

Banks, ATM and while-label AM operators can provide card-less cash withdrawal

The Reserve Bank of India has allowed all banks, ATM networks and White-Lable ATM Operators (WLAOs) tp provide the option of ICCW (Interoperable Card-less Cash Withdrawal (ICCW) at their ATMs. The National Payments Corporation of India (NPCI) has been advised to facilitate Unified Payments Interface (UPI) integration with all banks and ATM networks. While UPI would be used for customer authorisation in such transactions, settlement would be through the National Financial Switch (NFS) / ATM networks, RBI said.  

  Economy’s recovery remains resilient

The Indian economy’s recovery remains resilient, although risks stemming from global developments have thwarted the momentum, according to an article in RBI’s latest monthly bulletin. India faces challenges in building from the scars of the pandemic through larger investments in health and productivity of the human capital, per the article “State of the Economy”, put together by senior central bank officials. “The Indian economy consolidated its recovery, with most constituents surpassing pre-pandemic levels of activity. Heightened global risks stemming from weakening growth, elevated inflation, supply disruptions on account of geopolitical spillovers and financial market volatility stemming from synchronised monetary tightening pose near-term challenges,” the authors said. 

Equitas SFB chief Vasudevan to step down

PN Vasudevan, Managing Director and CEO, Equitas Small Finance Bank, has decided to step down from his role in order to focus on the public charitable trust that he and his wife had set up. Speaking to BusinessLine, Vasudevan said the announcement should be looked at as succession planning, and he would eventually consider selling his shares in Equitas to create a corpus for the trust. “There is no hurry or time pressure to find a successor. The board will take its time to ensure that the candidate is the right fit,” he said, adding that it could take at least nine months to one year for the process to complete. 

Published on May 22, 2022
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