Inflation moderation in WPI driven by easing core manufacturing, while food inflation and fuel pressures remain elevated.
WPI inflation moderated in 2012-13 driven by easing in non food manufactured products and broad based declines across commodity groups, while core inflation fell due to softer metal, chemical and textile prices and monetary measures. Food inflation remained elevated and shifted toward cereals and vegetables, with fuel, power and non food non manufacturing groups also sustaining higher inflation in parts.

Current account deficit management: curb gold imports and make oil pricing market determined to stabilise capital flows.
Management of the balance of payments focuses on containing the Current Account Deficit by curbing gold imports and making oil pricing more market determined, supplemented by easing remittances and diversifying software exports to reduce financing needs. To stabilise external financing, the Survey recommends promoting Foreign Direct Investment, guiding Foreign Institutional Investor flows toward long term rupee instruments to limit reversals, and carefully monitoring external commercial borrowing to avoid unhedged exposures by entities without foreign exchange revenues.

Capital infusion to augment Tier 1 capital supports public sector banks in maintaining regulatory capital adequacy.
Government proposes a targeted capital infusion to bolster Tier-1 capital in public sector banks to preserve regulatory capital standards and sustain solvency amid weak global recovery and domestic operational stress. The recapitalisation responds to rising provisioning needs and increased nonperforming assets, while PSBs continue to hold a dominant share of system assets and income.

Current account deficit management: curb gold imports and shift to market determined oil pricing to reduce external vulnerabilities.
The Survey recommends containing the current account deficit by curbing gold imports and making oil prices more market determined, while easing remittances and diversifying software exports to reduce financing needs. It calls for greater emphasis on attracting FDI, targeting FII flows toward long term rupee instruments to minimise reversal risk, and careful monitoring of external commercial borrowings to prevent unhedged exposures, noting that volatile capital inflows have contributed to financial fragility and exchange rate volatility.

Services sector growth driving GDP share expansion, with trade and financial services as principal contributors.
India's services sector showed the largest rise in share of GDP among the top 15 countries during 2001-2011, increasing by 8.1 percentage points with a high CAGR. Services' contribution at factor cost rose to 56.5% in 2012-13 (64.8% including construction). Major sub-sectors are trade, hotels and restaurants; financing, insurance, real estate and business services; community, social and personal services; and construction. Recent annual data show varied sub-sectoral growth, including slower trade growth but higher share, strong banking and insurance growth, and steady performance in other services.

Tourism sector growth increases foreign arrivals and employment potential in services, moderating amid global economic slowdown.
Telecom, tourism and railways outperformed other services between 2008-12, with telecom connections and rail freight rising markedly and tourism arrivals and foreign exchange earnings increasing. Foreign tourist arrivals grew in 2011 before moderating in 2012 due to global slowdown and Euro zone difficulties. The 12th Five Year Plan approach paper estimates substantially higher job creation per unit of investment in travel and tourism than in manufacturing, emphasising the sector's employment role.

Core inflation moderates, easing wholesale inflation while food inflation remains elevated due to cereals and administered fuel prices.
Monitoring shows headline WPI moderated due to easing non-food manufactured prices while food inflation remained high driven by cereals, vegetables and selected animal products; administered diesel prices, international fertilizer prices and higher oilseed and fuel-and-power inflation sustained non-food non-manufactured inflation, and the Reserve Bank's focus on core inflation (non-food manufactured products) reflected moderation aided by monetary measures and softer commodity prices.

WPI inflation may decline, reflecting softer commodity prices and manufacturing moderation, easing headline inflationary pressures.
Projection that WPI inflation may decline to 6.2-6.6% in March 2013 due to moderation in non-food manufacturing and softer global commodity prices, with cereals placing upward pressure on food inflation while milk and protein items moderate; transient domestic shocks like onion and diesel price changes may add pressure. Benign global commodity forecasts and anticipated fiscal consolidation are expected to moderate domestic inflation and allow scope for a more accommodative monetary stance amid ongoing growth risks.

Financial inclusion expanded through bank linkages, branchless banking and direct benefit transfer to deepen access to services.
Government expands financial inclusion through the Self-Help Group-Bank Linkage Programme and extension of the Swabhimaan campaign to smaller habitations using branchless banking via business correspondents. Ultra small branches are being set up to supervise agents and provide basic services. A Direct Benefit Transfer scheme will directly credit beneficiaries' bank accounts for selected schemes in identified districts. Agricultural inclusion is supported by increased credit disbursement and continued reliance on the Kisan Credit Card scheme for farmer access to institutional credit.

Cheque book issuance policy: banks may provide larger-leaf cheque books and must maintain adequate branch stocks.
Banks are permitted to supply cheque books with a larger number of leaves if requested by a customer, and are required to ensure adequate stocks of such larger-leaf cheque books at branch level to meet customer demand.

Placement of surplus funds with public sector banks: Ministries and CPSEs to park majority of excess cash; dividends board-declared.
Government instructions direct Ministries, Departments and Central Public Sector Enterprises to place a substantial portion of their surplus cash with public sector banks as part of policy to utilise PSBs in advancing economic objectives; dividend receipts are treated as shareholder revenue and are declared by PSB boards based on profit, legal provisions and extant instructions.

Foreign exchange trading permission for nationalized banks confirmed, with mandated disclosure of trading profit and loss details.
Permission for nationalized banks to engage in foreign exchange trading is affirmed, and aggregated profit and loss outcomes from those trading operations for the financial years referenced are disclosed in an annex.

Extension of tenure: Deputy Governor's appointment continued until completion of his three year term, retaining departmental oversight.
Shri Anand Sinha's appointment as Deputy Governor of the Reserve Bank of India is extended until January 18, 2014, completing a three year term from his assumption of office on January 19, 2011. During the extended tenure he will continue to oversee the Department of Banking Operations and Development, the Department of Non Banking Supervision, the Urban Banks Department, and the Departments of Risk Monitoring, Information Technology, Expenditure and Budgetary Control, Legal and Premises.

Licensing of new banks: RBI requires NOFHC sponsorship, fit-and-proper promoters, capital, governance and application requirements.
RBI's guidelines require new private banks to be sponsored through a wholly owned Non-Operative Financial Holding Company (NOFHC) whose promoter must meet fit and proper criteria; the NOFHC must hold specified minimum paid-up voting equity capital in the bank subject to lock-in and staged reduction, register as an NBFC, and comply with consolidated prudential, exposure and corporate governance norms while the bank must meet listing, branch, priority-sector and other operational conditions.

Cyber fraud prevention: regulatory framework mandates fraud reporting, internal controls and customer safeguards in banking operations.
The document compiles calendar-year totals and bank-wise data on ATM, debit card, internet banking and credit card frauds for 2010-2012 and describes RBI's multi strand regulatory response: the Frauds - Classification and reporting master circular requiring reporting, staff accountability, law enforcement referral, recovery and system fixes; specific ATM and skimming guidance advising customer education, PIN confidentiality and transaction monitoring; Working Group recommendations with quarterly implementation reviews; a credit card operations circular mandating internal controls and KYC; and advisories on phishing and public alerts to prevent credential disclosure.

Mandatory information sharing for loan sanctions required; failure to comply may attract regulatory action and penalties.
The Reserve Bank increased the provisioning requirement for restructured standard accounts to strengthen buffers and directed banks to put in place an effective information sharing mechanism covering credit, derivatives and unhedged foreign-currency exposures; sanctions, renewals or ad-hoc loans must be preceded by obtaining and sharing necessary information, with non-adherence liable to supervisory action including penalties and ongoing RBI monitoring.

Regulation of loan recovery agents: banks must control agents' conduct and face complaint liability under ombudsman rules.
Regulation requires banks to set engagement, training and permissible methods for recovery agents, prohibits uncivilized or unlawful conduct, makes banks vicariously responsible for agents' acts, and treats non-observance as a ground of complaint under the Banking Ombudsman Scheme while banks must follow the Code of Bank's Commitment to Customers and the Fair Practice Code for Lenders.

Base Rate system causes variation in home loan interest rates across banks due to deregulation of lending rates.
The RBI deregulated lending rates and introduced the Base Rate framework effective 1 July 2010; banks set lending rates by reference to their Base Rate plus customer specific adjustments, and because Base Rates differ across banks housing loan interest rates vary. A ministerial statement appended an annexure listing public sector banks' minimum and maximum home loan rates as of early 2013, demonstrating bank level variation under the Base Rate system.

Customer entitlement to larger cheque books: banks must supply on request and maintain adequate branch stocks.
Banks must provide customers with cheque books having a larger number of leaves upon customer demand and maintain adequate stocks of these cheque books at all branches, pursuant to the Reserve Bank's master circular on customer service.

Cooperative credit societies exempt from banking licence requirement under banking regulation, but may accept deposits only from members.
Cooperative Credit Societies are not required to obtain a banking licence under the Banking Regulation Act; Primary Agricultural Cooperative Credit Societies may accept deposits only from their members and use those member deposits to provide credit and lending services to needy members.