RBI doubles reserves for contingencies this fiscal
PrintListen to this Article
Financial market troubles had eroded the profitability of the central bank's international transactions in its last fiscal as interest rates on safe treasury securities, such as the US and the UK, remained at record low levels.
But tightening domestic credit market partly compensated for the lower profits from overseas.
Lower returns on some of the assets also led to the central bank reducing transfer of surplus funds to the treasury by 20%.
"The decline in the income from foreign assets in 2011 was more than offset by earnings from domestic assets which have expanded," RBI deputy governor Subir Gokarn told reporters.
Governor Duvvuri Subbarao has been warning of a likely instability in the global financial markets as Greece, Portugal and other peripheral nations struggle to raise funds due to high government debt. The rating downgrade of the US by Standard & Poor's has added fresh dimension to the looming global financial crisis.
The provisions made for contingencies reserves increased to Rs 12,167.27 crore, from Rs 5,168 crore a year ago, the central bank said in its annual report. Its fiscal runs between July and June. The central bank's transfer to the government fell to a three-year low of Rs 15,009 crore, from Rs 18,759 crore a year earlier.
"There is heightened anxiety about whether the euro area will be able to agree on an economically viable, fiscally sustainable and politically feasible solution to the vexing sovereign debt problem," Subbarao had said.
The near-zero interest rates in the US squeezed returns from foreign currency assets.
Earnings from deployment of foreign currency asset and gold fell 15% to Rs 21,149.6 crore, said the report.
But the 11 interest rate increases and strong demand for loans have helped RBI earn more than in the previous year as banks borrowed at higher rates.
Earnings from domestic sources more than doubled to Rs 15,920 crore.
The rate of earnings on average domestic assets rose from 3.45% to 3.77% in 2010-11. Meanwhile, RBI's gross income increased 12.7% to Rs 37,070 crore while its expenditure rose 3% to Rs 8,655.2 crore.
Category : RBI | Comments : 0 | Hits : 362
Listing of an Indian company on international stock exchanges got a push with the Reserve Bank of India (RBI) coming out with regulations under Foreign Exchange Management (FEMA). Experts believe new regulations will help companies utilise foreign exchange more effectively. Regulations have been made public through two notifications. First set of regulations deals with mode of payment and reporting of non-debt instruments. “The proceeds of purchase / subscription of equity shares of an ...
The Lok Sabha elections 2024 are in full swing with electioneering adding much colour to the entire process. However, to ensure that there is no wrongdoing, the Reserve Bank of India (RBI) has sent a missive to Payment System Operators (PSOs) asking them to keep a watch on all suspicious high-value transactions that they may come across in their systems. The general purpose of the letter is to deny the use of electronic fund transfer mechanism to anyone who is intending to influence the election...
he Reserve Bank on Tuesday came out with draft guidelines to further strengthen regulations on payment aggregators, a move aimed at boosting the payment ecosystem. The draft also covers the physical point-of-sale activities of payment aggregators (PAs). The RBI said that given the growth in digital transactions and the significant role that PAs play in this space, the current directions on PAs are proposed to be updated and cover, inter alia, KYC and due diligence of merchants, operations ...
The RBI on Monday eased rules to allow resident entities to hedge their exposures to the price risk of gold using the OTC derivatives in the International Financial Services Centre (IFSC) in addition to the derivatives on the exchanges in the IFSC. Resident entities such as banks were permitted to hedge their exposure to the price risk of gold on the exchanges in the IFSC that are recognised by the International Financial Services Centres Authority (IFSCA), and the new directive provides them...
The Reserve Bank of India (RBI) on March 21 said it has imposed monetary penalty on five co-operative banks for rule violations. These banks are Pragati Mahila Nagrik Sahakari Bank, Janata Co-operative Bank, Jila Sahakari Kendriya Bank, Karad Urban Co-operative Bank, and The Kalupur Commercial Co-operative Bank. The central bank imposed Rs 26.60 lakh on The Kalupur Commercial Co-operative Bank, Rs 13.30 lakh on Karad Urban Co-operative Bank, Rs 5 lakh on Janata Co-operative Bank, Rs 1 lakh...
Comments