Loading...

⚠ ✕
❮ Top
☎ Help
☰
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback✕

Contact Us At :

✉ E-mail: [email protected]

✆ Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters 0/2000
Make Most of Text Search ✕
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
╳
Add to...
You have not created any category. Kindly create one to bookmark this item!
✕
Create New Category
Hide
Title :
Description :
❮❮ Hide
❮ Default View
Expand ❯❯
Close ✕
🔎 Filters / Advanced Search ❯
TEXT

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In
Main Text + AI Text ❯
  • Main Text
  • Main Text + AI Text
  • AI Text
Category: ?
Categorized by AI
---- All Categories ---- ❯
  • ---- All Categories ----
  • Income Tax
  • GST
  • Customs, DGFT & SEZ
  • FEMA & RBI
  • Corp. Laws, SEBI & IBC
  • PMLA, Black Money & ED
  • Budget
  • News and Press Release
  • PTI News
Month:
---- All Months ---- ❯
  • ---- All Months ----
  • January
  • February
  • March
  • April
  • May
  • June
  • July
  • August
  • September
  • October
  • November
  • December
Year:
---- All Years ---- ❯
  • ---- All Years ----
  • 2026
  • 2025
  • 2024
  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • 2011
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
☰   Show Results ❯
    15th Meeting of ASEAN-India Trade in Goods Agreement (AITIGA) Joint Committee held during 6-9 October 2026
    Commerce Secretary Shri Rajesh Agrawal Highlights Need for Rigorous Legal Thinking at CTIL’s 9th Anniversary Celebration
    Release of Draft Guideline for Compilation Gross State Domestic Product (GSDP) Estimates by Expenditure Approach with Base Year 2022-23
    NLMC Invites Bids for Monetisation of 5.119-Acre Prime Freehold Land Parcel of HIL (India) Limited in New Delhi
    Union Finance Minister Smt. Nirmala Sitharaman on visit to Singapore for high-level meetings with Singapore Leadership and CEOs of business firms in S...
    Recommendations of the 57th Meeting of the GST Council
    India Began Building Bridges When the World Was Building Walls: Union Minister of Commerce and Industry Shri Piyush Goyal
    CCI approves acquisition of sole control over Omega-Meyer Ltd and Meyer Organics by BCPE Wellbeing Holdco Two Ltd. and Integral Investments Asia IV Lt...
    CCI approves proposed acquisition of 100% shareholding of Vishavari Tollway Ltd and nine SPVs operating road assets in India by Concessoc 41 SAS
    CCI approves acquisition of certain shareholding in Prestige Hospitality Ventures Limited by CPP Investment Board Pvt. Holdings (4) Inc.
    CCI approves proposed combination related to internal restructuring of the JSW Group
    NLMC Organises Mock E-Auction Training Ahead of RINL Land E-Auction
    Central Bureau of Narcotics (CBN) conducts Jan Samvad at Malana in Kullu District to create preventive drug awareness and to promote development
    Adopted Joint Statement after the India-UK Financial Markets Dialogue 2026, held in London
    Commerce Secretary Shri Rajesh Agrawal Calls for Greater Utilisation of India-EFTA TEPA Opportunities
    Commerce and Industry Minister Shri Piyush Goyal Holds Meetings with Leading U.S. Companies in New York to Strengthen India–U.S. Trade and Investmen...
    Monetary Policy Statement, 2026-27 Resolution of the Monetary Policy Committee October 5 to 7, 2026
    An Approach Paper on Expanding the scope and coverage for the Index of Services Production
    DRI cracks down on cross-border gold smuggling along Indo-Bangladesh border; seizes over 8.3 kg foreign-origin gold; 4 arrested
    Secretary, DFS, Shri Sanjay Lohiya chairs review meeting on progress of Financial Inclusion Schemes with senior executives of Public Sector and Privat...
❮
❯
❯❯
Maximize Maximize Maximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

+

Are you sure you want to delete "My most important" ?

NOTE:

News
Showing Results for :
Reset Filters
Results Found:
Show All Summaries Hide All Summaries
October 9, 2026
Show AI Summary
AITIGA review negotiations face time-bound subcommittee deliverables to resolve policy issues and modernise trade arrangements.
The AITIGA Joint Committee directed its sub-committees to accelerate pending review chapters through firm, time-bound deliverables and close coordination. Work covers legal and institutional issues, national treatment and market access, and rules of origin. ASEAN and India reaffirmed their commitment to resolve outstanding policy issues, deepen economic integration, and modernise the Agreement into a balanced and mutually beneficial framework strengthening bilateral trade.
October 9, 2026
Show AI Summary
International investment law requires balance between investment protection and States' regulatory authority amid sustainability and digital trade challenges.
International trade and investment law are increasingly shaped by sustainability-linked trade measures and digital trade and require rigorous legal analysis. CTIL supports trade capacity through legal analysis for free trade agreement negotiations, WTO processes, dispute settlement and institutional knowledge-building. International investment law increasingly recognises States' regulatory authority alongside investment protection, with institutionalisation, legitimacy and the balance between investment and public power identified as central concerns. Research and capacity-building also address climate, sustainability, supply chains, artificial intelligence and other emerging trade-policy areas.
October 9, 2026
Show AI Summary
Expenditure-side GSDP compilation framework standardises regional estimates through common methods, local data sources, and allocation indicators.
Draft guidelines establish a uniform framework for compiling expenditure-side Gross State Domestic Product estimates using base year 2022-23. They cover data sources, estimation procedures and methodologies for private and government consumption, gross fixed capital formation, inventory changes, valuables and net exports. State-specific data and allocation indicators are preferred, while recommended allocation methods support consistent estimates where direct subnational data are unavailable. The approach is intended to harmonise estimation practices and strengthen subnational national accounts capacity.
October 9, 2026
Show AI Summary
Freehold land monetisation proceeds through a two-stage electronic sale requiring technical bids and an Earnest Money Deposit.
Monetisation of a 5.119-acre freehold industrial land parcel owned by HIL (India) Limited at Najafgarh Industrial Area, New Delhi, is facilitated through an E-Tender followed by E-Auction. Eligible bidders must complete registration, submit technical bids, and furnish the required Earnest Money Deposit or Bank Guarantee by the stipulated deadline. Sale is subject to "as is where is", "as is what is", "whatever there is" and no-recourse or no-complaint conditions. The exact land extent is to be determined through a joint survey with the successful bidder.
October 9, 2026
Show AI Summary
India-Singapore investment cooperation advances through investor engagement, financial connectivity, capital-market participation, and support for identified investment opportunities.
India-Singapore investment cooperation is to be strengthened through engagements with political leadership, business representatives and global institutional investors. Discussions cover trade and investment, digital financial connectivity, capital markets, taxation, advanced manufacturing, skilling and aviation. The National Investment and Infrastructure Fund and GIFT City are identified as channels for Singaporean capital participation through investment vehicles and funds. The Ministry of Finance will facilitate connections between investors, Indian companies, financial institutions and State Governments for identified investment opportunities.
October 8, 2026
Show AI Summary
GST process reforms propose automated registration, refunds and return corrections while easing enforcement, credit access and trade compliance.
GST process reforms propose automated registration, registration amendments and cancellation, return reconciliation, input tax credit correction, and phased system-based refund processing. Standardised demand notices and adjudication safeguards are proposed alongside lower penalties, capped penalty-only appeal pre-deposits, withdrawal of arrest powers and narrowed prosecution provisions. Input tax credit reforms would expand refunds and remove specified blocked-credit restrictions, while export measures would broaden zero-rated and export-of-services eligibility. Goods interception would be intelligence-based and authorised, with further compliance relief for small taxpayers and targeted classification, exemption and reverse-charge measures.
October 8, 2026
Show AI Summary
Free trade agreement utilisation enables MSME market access, rules-of-origin awareness, export participation, and foreign investment opportunities while protecting sensitive sectors.
Free Trade Agreements are positioned to preserve sensitive domestic interests, particularly agriculture, fisheries and MSMEs, while widening market access for agricultural, marine, engineering, precision and electronic products and facilitating foreign investment. Proposed FTA utilisation desks across State Councils would assist MSMEs in using preferential arrangements, understanding rules of origin and market-access opportunities, participating in delegations and exhibitions, and presenting products and technologies to overseas markets.
October 8, 2026
Show AI Summary
Sole-control acquisition of nutraceutical and pharmaceutical businesses receives competition approval for Bain Capital-managed investment funds.
Competition Commission of India approval permits BCPE Wellbeing Holdco Two Limited and Integral Investments Asia IV Limited, funds managed or advised by Bain Capital, to acquire sole control over Omega-Meyer Limited and Meyer Organics Private Limited. The target businesses provide nutraceuticals globally and in India, while Meyer Organics Private Limited also produces and supplies certain over-the-counter and prescription finished-dose pharmaceuticals in India.
October 8, 2026
Show AI Summary
Highway asset acquisition approval covers full ownership transfer of a tollway operator and road-project special purpose vehicles.
Competition Commission of India approval covers the acquisition by Concessoc 41 SAS of the entire shareholding in Vishavari Tollway Private Limited and nine special purpose vehicles. The target entities operate designated national-highway stretches in Andhra Pradesh, Odisha and Gujarat, while Vishavari Tollway Private Limited provides operation and maintenance and engineering, procurement and construction services for those highway assets.
October 8, 2026
Show AI Summary
Competition clearance for hospitality share acquisition permits investment in a company owning and developing hotel and serviced apartment assets.
Competition Commission of India approved the proposed combination involving CPP Investment Board Private Holdings (4) Inc.'s acquisition of certain shareholding in Prestige Hospitality Ventures Limited. The target is an Indian public limited company within the Prestige group and owns and develops hospitality assets, including hotels and serviced apartments. The acquirer is incorporated in Canada and is managed by Canada Pension Plan Investment Board.
October 8, 2026
Show AI Summary
Internal group restructuring receives merger-control approval for amalgamating an integrated steel producer into the group's steel manufacturer.
Merger-control approval covers the proposed internal JSW Group restructuring through amalgamation of BMM Ispat Limited into JSW Steel Limited. The amalgamation would convert the group's majority interest in BMM into full ownership and is intended to enhance operational, financial and organisational efficiencies through economies of scale, resource pooling and capital rationalisation. BMM is commercially integrated in the group's supply chain through intra-group sales and procurements.
October 7, 2026
Show AI Summary
Transparent land e-auction procedures support bidder preparedness through mock training, registration and earnest-money requirements for phased asset monetisation.
National Land Monetization Corporation is facilitating a two-phase e-tender-cum-e-auction of 459 encumbrance-free land parcels of Rashtriya Ispat Nigam Limited through the RailTel E-Nivida e-Procurement Platform. Participation requires registration, fulfilment of prescribed requirements and submission of earnest money deposit within the applicable deadlines. Physical and online mock e-auction training familiarises prospective bidders with the bidding interface and participation procedure. Investor outreach provides information on plot details, eligibility requirements, registration and bidding conditions.
October 7, 2026
Show AI Summary
Preventive narcotics outreach promotes drug awareness, community participation, and sustainable livelihood alternatives to discourage illicit cannabis cultivation.
Preventive outreach in Malana village promoted drug awareness, youth engagement, community participation and alternative development in an area associated with illicit cannabis cultivation. Residents were sensitised to the harmful effects of cannabis, charas and hashish oil consumption and encouraged to pursue sustainable alternatives, including apiculture, animal husbandry, dairy activities and tourism. Community discussions addressed livelihood barriers, ecological concerns, and commitments to refrain from drug consumption and discourage illicit cannabis cultivation.
October 7, 2026
Show AI Summary
Cross-border financial cooperation guides work on market access, sustainable finance, fintech safeguards, and payment interoperability.
India-UK financial-markets cooperation covers capital-market connectivity, cross-border listings, investor access and development of GIFT IFSC as an international financial centre. Engagement also addresses insurance, pensions, asset management, sustainable-finance disclosures and cross-border investment. Fintech cooperation includes digital public infrastructure, central bank digital currencies, data exchange, responsible artificial intelligence, fraud prevention, cyber security and operational resilience. Cross-border payments work prioritises reduced frictions, transparency, efficiency and interoperability of electronic payment infrastructures.
October 7, 2026
Show AI Summary
Investment commitments and tariff predictability under India-EFTA TEPA support market access, supply-chain planning, and long-term bilateral trade.
India-EFTA TEPA establishes reciprocal market-access commitments, with EFTA coverage extending to most Indian exports and full coverage for non-agricultural products. Tariff predictability is intended to support investment planning, supply-chain development and longer-term business partnerships. Agricultural opportunities may arise where duties have been reduced to zero. Article 7.1 includes an investment commitment under which the EFTA States are to aim to increase foreign direct investment into India and facilitate employment generation within specified implementation periods.
October 7, 2026
Show AI Summary
Foreign investment engagement focuses on expanded partnerships across financial services, manufacturing, insurance, and emerging technologies in India.
India-U.S. trade and investment engagement was pursued through discussions with leading United States companies on expanding investment, partnerships and commercial operations in India. Financial-sector discussions addressed private equity, asset and wealth management, insurance, and financial services, including prospective engagement aligned with the objective of insurance access for all by 2047.
October 7, 2026
Show AI Summary
Policy repo rate recalibration responds to inflationary pressures, adopting calibrated tightening while future actions depend on growth and inflation conditions.
Monetary policy is recalibrated through an increase in the policy repo rate under the liquidity adjustment facility by 25 basis points to 5.50 per cent. The monetary policy stance shifts to calibrated tightening, indicating that near-term rate reductions are excluded and that subsequent action may consist of a rate increase or a pause, depending on evolving conditions and the outlook. Further rate action depends on growth-inflation developments, underlying inflation, broadening price pressures, second-round effects and demand impulses.
October 7, 2026
Show AI Summary
Index of Services Production expansion proposes broader service-sector coverage through education, health, residential care, public administration and defence.
The Index of Services Production is proposed to expand beyond its initial formal-sector coverage, which relies on high-frequency administrative data and GST outward-supplies data. Education, Human Health and Residential Care, and Public Administration and Defence are proposed for inclusion. Their incorporation would increase coverage of services-sector Gross Value Added and support aggregation of sub-sectoral indices into a unified measure of short-term services-sector movements. Stakeholder views are invited on the proposed methodology.
October 7, 2026
Show AI Summary
Cross-border gold smuggling enforcement addresses concealed foreign-origin gold transport through customs seizure, arrest, and investigation of organised networks.
Intelligence-led customs enforcement targeted cross-border gold smuggling through surveillance and interception of four persons travelling from a border route. Personal searches recovered foreign-origin gold biscuits concealed in specially tailored cloth waist belts. Seventy-two gold biscuits were seized under relevant provisions of the Customs Act, 1962, and the four persons were arrested. Investigation continues into organised networks and wider syndicates involved in the movement and distribution of smuggled gold.
October 6, 2026
Show AI Summary
Financial inclusion drives digital lending, insurance claim awareness, portal enrolment, and banking access for marginalised sections.
Banks were urged to expand brick-and-mortar branches and banking correspondent coverage in unbanked villages, strengthen digital outreach, and implement end-to-end digital loan processing. Working-capital lending for micro-enterprises through UPI-linked credit lines and credit cards was highlighted. Banks were also directed to increase awareness of insurance claim eligibility, exercise care in claim-related grievance handling, and enrol new PMJJBY and PMSBY beneficiaries through the Jan Suraksha portal.

News

Back

All News

Showing Results for :
Reset Filters
No Records Found

News

Back

All News

Customs, DGFT & SEZ

First Bi-monthly Monetary Policy Statement, 2015-16 By Dr. Raghuram G. Rajan, Governor

April 7, 2015

Contents
Acts
Plus +
Summary
Note

Note

-

Bookmark

Print

Print

Monetary and Liquidity Measures

On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to:

  • keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.5 per cent;
  • keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL); and
  • continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system through auctions; and
  • continue with daily variable rate repos and reverse repos to smooth liquidity.

Consequently, the reverse repo rate under the LAF will remain unchanged at 6.5 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.5 per cent.

Assessment

2. Since 2014-15’s sixth bi-monthly monetary policy statement of February, a moderate and uneven global recovery is emerging, with economies being buffeted (or supported) by currency fluctuations and commodity prices. Growth in the United States is likely to have been weak in the first quarter of calendar 2015, partly because of US dollar appreciation, but is expected to strengthen. The Euro area has started to show modest improvement, supported by a boost to demand from lower crude prices and the depreciation of the euro as well as easing financial and credit conditions following the commencement of quantitative easing. With the waning of the impact of the consumption tax increase, growth turned positive in Japan in Q4 of 2014 and consumer confidence and exports picked up. However, retail sales and industrial production contracted, indicating that the outlook is still weak. Growth continues to slow in China amidst financial fragilities and macroeconomic imbalances. This will have regional and global ramifications, although the softness in international commodity prices is providing some offset for net importers while adversely impacting net exporters. Global growth is likely to firm up through 2015 and 2016, supported by stronger recovery in the advanced economies (AEs) and soft energy prices. Downside risks mainly emanate from the slowdown in China, geopolitical risks surrounding oil prices and the uneven effects of currency and commodity price movements.

3. Global financial markets have been boosted by expectations of normalisation of US monetary policy being pushed back into late 2015, monetary policy stances turning highly accommodative in other AEs, and several emerging market economies (EMEs) easing policy rates to address growth concerns. Long-term yields have declined to all-time lows on weak inflation expectations, compression of term premiums and the safe haven allure of US Treasuries. Ultra low interest rates and reduction in risk premia have raised most asset prices to record highs, and have pushed investors to riskier assets such as equity and lower rated debt instruments. Exchange rates have experienced large and volatile movements, with the US dollar strengthening against most currencies. Among EMEs, markets have tended to discriminate against those with relatively weaker fundamentals and/or oil exporters. Nevertheless, with high portfolio flows to EMEs, risks from sudden shifts in market sentiment have increased.

4. Domestic economic activity is likely to have strengthened in Q4. Second advance estimates of the Ministry of Agriculture suggest that the contraction in food grains production in 2014-15 may turn out to be less than earlier anticipated. However, the adverse impact of unseasonal rains and hailstorms in March is still unfolding. Initial estimates indicate that as much as 17 per cent of the sown area under the rabi crop may have been affected though the precise extent of the damage remains to be determined. The growth in allied activities is likely to remain strong as in the recent past, though it remains to be seen whether it will fully compensate the decline in food grains output.

5. The industrial sector, and in particular, manufacturing appears to be regaining momentum, with the growth of production in positive territory for three consecutive months till January. While basic goods production has been expanding steadily since November 2013, capital goods output has been relatively lumpy and volatile, and more positive readings are needed to be confident about a durable pick-up in investment demand. The persisting contraction in consumer durables production for over two years could be reflecting the underlying weakness in consumption demand as well as higher imports.

6. Mixed signals are coming from the service sector. While the national accounts statistics seem to suggest that consumption demand for services is robust relative to the demand for goods, and purchasing managers perceive activity expanding on new orders, various coincident indicators of services sector activity including railway and port traffic, domestic and international passenger traffic, international freight traffic, tourist arrivals, motorcycle and tractor sales as well as bank credit and deposit growth remain subdued.

7. Retail inflation measured by the year-on-year changes in the revised consumer price index (CPI) firmed up for the third successive month in February as favourable base effects dissipated, despite the price index remaining virtually flat since December. The still elevated levels of prices of protein-rich items such as pulses, meat, fish and milk kept food inflation from following the seasonal decline in prices of vegetables and fruits. The prices of items such as sugar and edible oil moderated in consonance with the downturn in global commodity prices. Fuel inflation edged up for the second month in a row due to the increase in prices of electricity and firewood.

8. Inflation excluding food and fuel fell successively in the nine months till February. A large part of this disinflation has been on account of the slump in international crude oil prices feeding through into domestic prices of petrol and diesel that are included under the category transport and communication. Inflation in respect of housing has also eased in the revised CPI, in part reflecting methodological and coverage improvements. Furthermore, upside pressures affecting prices of services such as education, health and other services have also fallen on account of weak demand conditions. The rate of growth of rural wages has come off substantially from the double digit levels that prevailed up to November 2013. Firms are also reporting a substantial easing of input price pressures, barring the most recent purchasing manager surveys. Reflecting past disinflation, inflation expectations of households are in single digits, although they too exhibit some firming up in Q4 in response to the turning up of food and fuel inflation during January-February.

9. Since the shift in the monetary policy stance in January towards accommodation, the Reserve Bank has moved to ensure comfortable liquidity conditions through pro-active liquidity management, including fine-tuning operations on week days and access to the MSF and fixed rate reverse repo on Saturdays. This has helped to smooth the liquidity frictions that characterise events such as advance tax payments and balance sheet dates, keeping the money market rates anchored to the repo rate. In order to alleviate the pressures that build up in March on account of frictional factors, the Reserve Bank augmented its liquidity management instruments by engaging in repos of maturities ranging from 8 to 28 days cumulating to an outstanding amount of ₹ 1430 billion (including support from the MSF of ₹ 416 billion) at end-March in addition to regular 14-day term repo auctions and fixed rate overnight repos. The availability of liquidity can be gauged from the fact that in March, average daily liquidity returned by market participations through variable/fixed rate reverse repos amounted to ₹ 293 billion.

10. Export performance has been progressively weakening and contraction set in on both non-oil and petroleum product exports since December 2014. Fragile external demand conditions and the softness in international commodity prices have taken a heavy toll, as in several other EMEs in Asia. In particular, price realisations have been eroded, despite export volumes going up. With the Indian rupee gaining in real effective terms, export margins are coming under pressure for those exporters without substantial imported inputs. Net terms of trade gains and compression in imports of petroleum products have narrowed the trade deficit in the last three months to its lowest level since 2009-10. Gold imports remained contained; although non-oil non-gold imports grew at a modest pace in these months, they may be reflecting substitution effects in view of the sluggishness in domestic manufacturing.

11. Exports of services, particularly, software and travel have provided a silver lining and have helped to hold down the current account deficit (CAD) which has narrowed in Q3. This improvement has likely extended into Q4. As a result, capital inflows - mainly portfolio flows into domestic debt and equity markets and foreign direct investment - have exceeded the external financing requirement and enabled accretion to the foreign exchange reserves which reached an all-time peak of US$ 343 billion as on April 3, 2015. These reserves, including forward purchases that will be delivered over the next few months, provide some buffer against potential capital outflows when monetary policy normalisation in AEs commences. Good macroeconomic policy will, of course, be the critical first line of defence in retaining investor confidence.

Policy Stance and Rationale

12. In 2015 so far, the inflation path has evolved along the projected path after a sizable undershoot of the January 2015 target. CPI inflation is projected at its current levels in the first quarter of 2015-16, moderating thereafter to around 4 per cent by August but firming up to reach 5.8 per cent by the end of the year (Chart 1). There are upside risks to the central projection emanating from possible intensification of el niño conditions leading to a less than normal monsoon; large deviations in vegetable and fruit prices from their regular seasonal patterns, given unseasonal rains; larger than anticipated administered price revisions; faster closing of the output gap; geo-political developments leading to hardening of global commodity prices; and spillover from external developments through exchange rate and asset price channels. However, at this juncture, these upside risks appear to be offset by downsides originating from global deflationary/disinflationary tendencies, the still soft outlook on global commodity prices; and slack in the domestic economy.

13. Transmission of policy rates to lending rates has not taken place so far despite weak credit off take and the front loading of two rate cuts. With little transmission, and the possibility that incoming data will provide more clarity on the balance of risks on inflation, the Reserve Bank will maintain status quo in its monetary policy stance in this review.

14. The Monetary Policy Framework Agreement signed by the Government of India and the Reserve Bank in February 2015 will shape the stance of monetary policy in 2015-16 and succeeding years. The Reserve Bank will stay focussed on ensuring that the economy disinflates gradually and durably, with CPI inflation targeted at 6 per cent by January 2016 and at 4 per cent by the end of 2017-18. Although the target for end-2017-18 and thereafter is defined in terms of a tolerance band of +/- 2 per cent around the mid-point, it will be the Reserve Bank’s endeavour to keep inflation at or close to this mid-point, with the extended period provided for achieving the mid-point mitigating potentially adverse effects on the economy. As outlined above, several favourable forces are at work, consistent with the change in the monetary policy stance towards accommodation effected from January. The Reserve Bank’s intent is to allow the disinflationary momentum to spread through the economy, but remain vigilant about any resurgence of inflationary pressures that may destabilise the progress towards the inflation objectives set in the Agreement.

15. The outlook for growth is improving gradually. Comfortable liquidity conditions should enable banks to transmit the recent reductions in the policy rate into their lending rates, thereby improving financing conditions for the productive sectors of the economy. Along with initiatives announced in the Union Budget to boost investment in infrastructure and to improve the business environment, these factors should provide confidence to private investment and, together with the conducive outlook on inflation, deliver real income gains to consumers and lower input cost advantages to corporates. GDP growth estimates of the CSO for 2014-15 already project a robust pick-up, but leading and coincident indicators suggest a downward revision of these estimates when fuller information on real activity for the last quarter becomes available. Uncertainty surrounding the arrival and distribution of the monsoon and unanticipated global developments are the two major risks to baseline growth projections. Assuming a normal monsoon, continuation of the cyclical upturn in a supportive policy environment, and no major structural change or supply shocks, output growth for 2015-16 is projected at 7.8 per cent, higher by 30 bps from 7.5 per cent in 2014-15, but with a downward bias to reflect the still subdued indicators of economic activity (Chart 2).

16. Going forward, the accommodative stance of monetary policy will be maintained, but monetary policy actions will be conditioned by incoming data. First, the Reserve Bank will await the transmission by banks of its front-loaded rate reductions in January and February into their lending rates. Second, developments in sectoral prices, especially those of food, will be monitored, as will the effects of recent weather disturbances and the likely strength of the monsoon, as the Reserve Bank stays vigilant to any threats to the disinflation that is underway. The Reserve Bank will look through both seasonal as well as base effects. Third, the Reserve Bank will look to a continuation and even acceleration of policy efforts to unclog the supply response so as to make available key inputs such as power and land. Further progress on repurposing of public spending from poorly targeted subsidies towards public investment and on reducing the pipeline of stalled investment will also be helpful in containing supply constraints and creating room for monetary accommodation. Finally, the Reserve Bank will watch for signs of normalisation of the US monetary policy, though it anticipates India is better buffered against likely volatility than in the past.

Part B: Developmental and Regulatory Policies

17. This part of the Statement reviews the progress on various developmental and regulatory policy measures announced by the Reserve Bank in recent policy statements and also sets out new measures to be taken for strengthening the banking structure; broadening and deepening financial markets and extending the reach of financial services to all.

I. Monetary Policy Framework

18. Steps taken to revise the monetary policy framework are documented in the accompanying Monetary Policy Report.

II. Banking Structure

19. The Basel Committee on Banking Supervision issued the final rules on the Net Stable Funding Ratio (NSFR) in October 2014. The Reserve Bank has already started phasing in implementation of the Liquidity Coverage Ratio (LCR) from January 2015 and is committed to the scheduled implementation of NSFR from January 1, 2018 for banks in India. The Reserve Bank proposes to issue draft guidelines on NSFR by May 15, 2015.

20. Guidelines on Countercyclical Capital Buffers (CCCB) were issued on February 5, 2015. They advised that the CCCB would be activated as and when circumstances warrant, and that the decision would normally be pre-announced with a lead time of four quarters. The framework envisages 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. A review and empirical testing of these indicators was carried out to assess whether activation of the CCCB is warranted. It was concluded that the overall situation does not warrant imposition of CCCB at this point of time.

21. In July 2014, banks were allowed to issue long term bonds (LTBs), with exemptions from certain regulatory pre-emptions, for lending to (i) long-term projects in infrastructure sub-sectors, and (ii) affordable housing. However, cross-holding of such bonds amongst banks is currently not permitted. On a review, it has been decided to allow banks to invest in such bonds issued by other banks, subject to the following conditions:

  1. banks’ investment in these bonds will not be treated as ‘assets with the banking system in India’ for the purpose of calculation of NDTL; and
  2. any single bank’s holding of bonds in a particular issue will be subject to certain limits in relation to the bond issue size. Its aggregate holding of such bonds will also be subject to certain limits in relation to its own assets.
  3. LTBs held for trading will reduce the bank’s priority sector and liquidity benefits obtained from its own issuance of LTBs.

Detailed guidelines in this regard will be issued shortly.

22. For monetary transmission to occur, lending rates have to be sensitive to the policy rate. With the introduction of the Base Rate on July 1, 2010 banks could set their actual lending rates on loans and advances with reference to the Base Rate. At present, banks are following different methodologies in computing their Base Rate - on the basis of average cost of funds, marginal cost of funds or blended cost of funds (liabilities). Base Rates based on marginal cost of funds should be more sensitive to changes in the policy rates. 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. Detailed guidelines will be issued shortly.

23. The Financial Benchmarks India Pvt. Ltd., jointly floated by the Fixed Income Money Market and Derivatives Association of India (FIMMDA), the Foreign Exchange Dealers' Association of India (FEDAI) and the Indian Banks’ Association (IBA), has been established as an independent benchmark administrator. This administrator will start operations by end-May 2015. Once it starts publishing various indices of market interest rates, the Reserve Bank will explore the possibility of encouraging banks to use the indices as an external benchmark for pricing bank products.

24. The Reserve Bank has been prescribing a comprehensive ‘Calendar of Reviews’ to be deliberated by the boards of banks, with significant additions to the calendar over the years. Time spent on reviews reduces the leeway for the board to discuss issues of strategic importance for banks such as product market strategy and risk management. The Committee to Review Governance of Boards of Banks in India (Chairman: Dr. P.J.Nayak) recommended that discussions in the boards of banks need to be upgraded and greater focus should be on strategic issues. It is, therefore, proposed to do away with the mandatory calendar of reviews 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.

25. The need to bring in professionalism to the boards of banks cannot be overemphasized. In order to attract and retain professional directors, it is essential that they are appropriately compensated. Public sector banks follow guidelines issued by the government in this regard. The remuneration of the part-time Chairmen of private sector banks are approved specifically for each bank under the current statutory provisions. However, there is no guidance on remuneration to other non-executive directors of private sector banks. Therefore, it is proposed:

  1. to issue guidelines to private sector banks on a policy on remuneration for the non-executive directors (other than part-time Chairman) that will reflect market realities and will be within the parameters specified in the Banking Regulation Act 1949 and the Companies Act, 2013; and
  2. to discuss with the Government the adoption of a similar remuneration policy for the non-executive directors of the public sector banks.

26. With a view to enlarging the scope of urban co-operative banks for expanding their business, 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 ₹ 100 crore, to issue credit cards. Detailed guidelines in this regard will be issued separately.

27. Similarly, with a view to providing greater freedom to state co-operative banks to expand their business and to provide technology-enabled services to their customers, 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. Detailed guidelines in this regard will be issued separately.

III. Financial Markets

28. Several steps have been taken by the Reserve Bank to promote liquidity in the government securities (G-sec) market as recommended by the Working Group on Enhancing Liquidity in the Government Securities and Interest Rate Derivatives Markets (Chairman: Shri R. Gandhi). These include, inter alia, a) conduct of G-sec auctions at both uniform price and multiple price formats; b) change of the settlement cycle of primary auctions for treasury bills (T-bills) from T+2 to T+1 basis; and c) re-issuance of state development loans.

29. As part of continuing measures to promote liquidity, the Reserve Bank will formulate a scheme for market making by primary dealers in semi-liquid and illiquid government securities. Details of the scheme will be worked out and implemented in consultation with market participants within the next three months.

30. Although the G-sec market is predominantly institutional in nature, the Reserve Bank has initiated several steps to promote retail/individual investments, such as the non-competitive bidding scheme, and enabling access to the Negotiated Dealing System-Order Matching (NDS-OM). To increase participation of the retail and mid-segment investors in the G-sec market, gilt account holders (GAHs) were also extended web-based access to NDS-OM (secondary market trading platform) and NDS-auction platform (primary market platform) earlier. Auctions of G-secs have since moved to a more robust CBS platform (e-Kuber). Accordingly,

  1. it is now proposed to introduce a similar web-based solution for participation of all mid-segment / retail investors having gilt accounts on the e-Kuber platform. The facility is expected to be made available within the next three months.
  2. Considering the need to tap private savings through G-secs, retail investors/individuals could be provided direct access to both primary and secondary 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.
  3. The Reserve Bank has been in consultation with all stakeholders to enable seamless movement of securities from subsidiary general ledger (SGL) form to demat form and vice versa to promote trading of G-secs on stock exchanges. Concomitantly, it has also been decided to provide demat account holders a functionality to put through trades on NDS-OM. As implementation of these reforms involves multiple agencies, it is proposed to constitute an Implementation Group with representatives from all stakeholders to roll out the measures within a period of six months.
  4. The non-competitive bidding facility available to retail investors is currently applicable only to auctions of dated securities other than Treasury Bills. In the case of Treasury Bills, a different type of non-competitive bidding is permitted only for State governments, eligible provident funds, select foreign central banks and sovereign wealth funds. It is proposed to allow non-competitive bidding facility in Treasury Bills to individuals as well. Details of the facility will be worked out and implemented in consultation with the Government of India.

31. A few international financial institutions were permitted to issue rupee bonds in overseas markets, subject to certain conditions. These issues have been received with interest. The appetite for rupee debt amongst international investors is a welcome development. In view of this, it is proposed to expand, in consultation with the Government of India, the scope of such bond issues by the international financial institutions as also to permit Indian corporates eligible to raise external commercial borrowing (ECB) through issuance of rupee bonds in overseas centers with an appropriate regulatory framework.

32. Under the present regulatory framework governing foreign exchange derivatives contracts under the Foreign Exchange Management Act, 1999 (FEMA), writing of options by the users on a standalone basis is not permitted. However, end-users can enter into option strategies of simultaneous buying and selling of plain vanilla European options, provided there is no net receipt of premium. With a view to 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, subject to conditions. Detailed operating instructions shall follow separately.

IV. Access to Finance

33. The Reserve Bank had constituted an Internal Working Group to revisit the Priority Sector guidelines. The Working Group has since submitted its report, which was placed on the Reserve Bank’s website for comments/suggestions.The Working Group has, inter alia, recommended specific sub-targets for small and marginal farmers and micro enterprises and inclusion of certain specific types of social infrastructure within the ambit of priority sector lending. The working Group has also recommended introduction of tradable Priority Sector Lending Certificates as another instrument to manage deficit/surplus amongst the players within the system. The Reserve Bank will take a view on the recommendations in the light of feedback received and the guidelines in this regard will be issued shortly.

34. Taking into consideration the improvement in the Micro-Finance Institutions (MFI) sector and recommendations of the Committee on Comprehensive Financial Services for Small Businesses and Low Income Households (Chairman: Dr. Nachiket Mor), there is a need to revise upwards the limit relating to total indebtedness of the borrower, eligible rural and semi-urban household annual incomes and loan amounts to be disbursed in the first cycle and in subsequent cycles as follows:

  1. Total indebtedness of a borrower, excluding educational/ medical expenses, not to exceed ₹ 1,00,000 (raised from the current limit of ₹ 50,000).
  2. Loan disbursed to a borrower with a rural household annual income not exceeding ₹ 1,00,000 (enhanced from ₹ 60,000) or urban and semi-urban household income not exceeding ₹ 1,60,000 (enhanced from ₹ 1,20,000).
  3. Disbursement of the loan amount not to exceed ₹ 60,000 (enhanced from ₹ 35,000) in the first cycle and ₹ 1,00,000 (enhanced from ₹ 50,000) in subsequent cycles.

Detailed guidelines will be issued shortly.

35. Several measures have been taken to ensure the timely flow of funds to the infrastructure sector. One of them was to create a separate category of non-bank finance companies (NBFCs) called NBFC-infrastructure debt fund (NBFC-IDF). These NBFCs were allowed only to provide take-out finance for infrastructure projects in the Public Private Partnership (PPP) segment under a tripartite agreement involving, among others, the project authority. Certain regulatory dispensations were also given to these NBFCs. With a view to expanding the nature of projects to which they can lend, it is proposed to allow NBFC-IDFs to provide take-out finance for infrastructure projects that have completed one year of operation in the PPP segment without a tripartite agreement and to the non-PPP segment, subject to certain conditions. Detailed guidelines are being issued separately.

36. Looking ahead, the Reserve Bank’s developmental and regulatory policies will continue to be guided by the five-pillar approach to improve the efficacy of monetary and liquidity management, expand financial inclusion and carry forward banking sector reforms by adapting the best international practices to country-specific requirements.

37. The second bi-monthly monetary policy statement will be announced on June 2, 2015; the third bi-monthly monetary policy statement on August 4, 2015; the fourth bi-monthly monetary policy statement on September 29, 2015; the fifth bi-monthly monetary policy statement on December 1, 2015; and the sixth bi-monthly monetary policy statement on February 2, 2016.

Alpana Killawala

Principal Chief General Manager

Topics

Acts Income Tax