With the ongoing cash crunch, digital money gets another lifeline

Source: Business Standard, Apr 19, 2018

New Delhi: After a lull for months, things might be again looking up for the country’s digital money entities, due to the ongoing cash shortage.

After demonetisation, the sector had a shortlived dream run, from November 2016 to mid-2017. According to the Reserve Bank of India’s data on prepaid payment instruments (a chunk of which is mobile wallets), these collectively clocked Rs 38.3 billion in transactions during January, falling to Rs 36.5 billion in February. The March numbers are not out, but might fall again – many users stopped using mobile wallets after the February 28 deadline for getting the know-your-customer (KYC) checks done by mobile wallet entities. Many had decided not to get this done and, say observers, the digital money space had lost almost 45 per cent of its user base.

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FDI threshold set at $20 million for merchant banking, asset management

Source: Business Standard, Apr 16, 2018

Foreign direct investors, keen on pumping money in merchant banking or asset management, have to bring in a minimum of $20 million.

The Centre has fixed a threshold of $20 million for foreign direct investments (FDIs) in unregistered fund-based activities such as merchant banking, underwriting, portfolio management services, stockbroking, and asset management.

The fund-based activities also include venture capital, custodian services, factoring, leasing and finance, housing finance, credit card business, micro credit, and rural credit. On the other hand, threshold for non-fund activities, such as investment advisory services, financial consultancy, forex broking, has been set at $2 million.

These activities also include money changing business and credit rating agencies. All these activities are unregulated by any financial sector regulator and FDI is allowed under the government route.

Currency shortage spreads to more states

download (1)Source: The Economic Times, Apr 17, 2018

MUMBAI: The shortage of currency reported in Andhra Pradesh, Telangana and Madhya Pradesh in the past few weeks has spread to a few more states, news agencies reported on Monday.

There were complaints of cash shortages in eastern Maharashtra, Bihar and Gujarat on Monday. The shortage is being felt despite currency in circulation crossing the pre-demonetisation level. Since the amount of currency put out by the Reserve Bank of India (RBI) and government printing presses is adequate for normal transactions, bankers believe there is hoarding of the Rs 2,000 notes. Nearly Rs 5 lakh crore worth of Rs 2,000 notes were printed after demonetisation.

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RBI governor Urjit Patel rejects easing NPA norms

download.jpgSource: The Economic Times, Apr 12, 2018

MUMBAI: The Reserve Bank has ruled out any relaxation in bad loan rules, saying the tough norms will discipline borrowers and prevent banks from pushing distressed loans under the carpet, two senior officials, who did not want to be named, said.

This message was conveyed by RBI governor Urjit Patel to parliamentarians in a closed-door meeting held in New Delhi on Tuesday.

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Foreign bond investors get access to $16 bn of additional debt in India

Source: Business Standard, Apr 09, 2018

India’s central bank raised limits for overseas investors that could lure $16 billion of additional funds into the nation’s sovereign as well as corporate debt.

Foreign investors will be allowed to increase holdings of a sovereign, state and corporate bonds by Rs 1.04 trillion ($16 billion) in the fiscal year to March 2019. Overseas investors can boost holding of central government securities by 0.5 percentage points a year, taking the limit to 5.5 per cent in fiscal year to March 2019 and to 6 per cent in the following 12 month period, the Reserve Bank of India said in a statement on Friday. The central bank set 9 per cent as the limit for foreign investors to own in debt sold by Indian companies.

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Forex reserves rise by $1.82 billion to $424.36 billion

download.jpgSource: The Economic Times, Apr 06, 2018

Mumbai: The country’s foreign exchange reserves hit a life-time high of $424.361 billion after rising by $1.828 billion in the week to March 30, helped by rise in foreign currency assets, the Reserve Bank said today.

In the previous week, the reserves had increased by $1.197 billion to $422.532 billion.

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RBI monetary policy April 2018 update

download (1)Source: Financial Express, Apr 01, 2018

New Delhi: The RBI is likely to keep interest rates unchanged in its first bi-monthly monetary policy review for 2018-19 to be unveiled this week as hardening global crude oil prices continue to pose a risk to domestic inflation. This would also be the first monetary policy announcement after the Budget, which has slightly deviated from the fiscal consolidation roadmap. The six-member Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, is to meet on April 4 and 5.

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