Goldiam International rises on securing Rs 80-cr export order
Goldiam International rallied 5.23% to Rs 377.50 after the company received orders worth Rs 80 crore from international clients for the manufacture and export of lab-grown diamond jewelry.The order, valued at Rs 80 crore, is scheduled to be executed on or before 8 July 2025. Goldiam International is engaged in the manufacturing and export of diamond-studded gold & silver jewelry.The companys consolidated net profit increased 53.2% to Rs 49.73 crore on a 38.6% jump in net sales to Rs 279.63 crore in Q4 FY25 over Q4 FY24.Powered by Capital Market - Live News
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Time of India
36 minutes ago
- Time of India
Mutual funds reduces overall cash allocation by Rs 6,200 crore to Rs 2.17 lakh crore in May
Synopsis Mutual funds have reduced their overall cash allocation by Rs 6,240 crore on a monthly basis to Rs 2.17 lakh crore in May. The cash allocation reported in April was Rs 2.23 lakh crore.
Indian Express
37 minutes ago
- Indian Express
RBI Explained – History, tools of monetary policy, and surplus transfer
UPSC Issue at a Glance is an initiative by UPSC Essentials aimed at streamlining your preparation for the prelims and mains examinations by focusing on current issues making headlines. Every Thursday, cover a new topic in a lucid way. This week we take you through the history, functions, monetary policy instruments and arrangements between the Reserve Bank of India and the government. Let's get started. If you missed the previous UPSC Issue at a Glance | India's Linguistic Landscape: From constitutional safeguards to endangered languages from the Indian Express, read it here. The Reserve Bank of India's six-member Monetary Policy Committee (MPC) has slashed the repo rate by a bigger-than-expected 50 basis points to 5.50 per cent, marking the third consecutive reduction since February 2025. Additionally, the Board of the RBI on May 23 approved a record surplus transfer, or dividend, of Rs 2.69 lakh crore to the Central Government for the accounting year 2024-25. It followed a meeting of the central board of directors of the RBI on May 15. In this context, it becomes essential to know about the RBI and its monetary policy comprehensively and understand how the relationship between the RBI and the government has evolved in the backdrop of the transfer of the RBI's surplus. (Relevance: UPSC Examination General Studies-III: Current events of national and international importance, Indian economy and issues relating to planning, mobilisation of resources, growth, development and employment. Every aspect of the RBI, from its origin, structure, and key functions to its evolving policies, holds importance for UPSC CSE. Previously, several questions have been asked on this topic. This year's UPSC Prelims also had a question on the RBI's functions (do check it in the post-read questions), which presents the RBI as an evergreen topic in the economy section that aspirants must prepare comprehensively.) The Reserve Bank of India is a central bank of India. While central banks in developed countries can be traced as far back as the 17th century, among developing countries, the Reserve Bank of India, established on April 1, 1935, is one of the oldest such institutions. It was established in accordance with the provisions of the Reserve Bank of India Act, 1934. The first Governor of the RBI was the Australian Sir Osborne Arkell Smith, one of the two managing governors of the Imperial Bank of India. Sir C. D. Deshmukh was the first Indian to become Governor of the RBI. The Central Office of the Reserve Bank was initially established in Kolkata but was permanently moved to Mumbai in 1937. Following Partition, it was agreed that the RBI would cease to be the currency authority for Pakistan, and Indian notes would cease to be legal tender in Pakistan. Though originally privately owned, since nationalisation in 1949, the Reserve Bank has been fully owned by the Government of India. Functions of RBI Since it came into existence, RBI has navigated and managed the several transitions the country has undergone — from a time when the planning process held sway to a more market-orientated economy and now an increasingly digital economy. Notably, the Preamble of the RBI describes the basic functions of the Reserve Bank as 'to regulate the issue of banknotes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage; to have a modern monetary policy framework to meet the challenge of an increasingly complex economy; and to maintain price stability while keeping in mind the objective of growth.' In simple terms, the RBI is responsible for monetary stability, currency management, inflation targeting, regulating the banking system, setting interest rates, and managing the currency and payment systems. Monetary policy refers to the use of monetary instruments under the control of the central bank to influence variables, such as interest rates, money supply and the availability of credit, with a view to achieving the objectives of the policy. The monetary policy is used by the RBI to maintain price stability while keeping in mind the objective of growth. Notably, in May 2016, the RBI Act was amended to provide a legislative mandate to the central bank to operate the country's monetary policy framework. The framework, according to the RBI website, 'aims at setting the policy (repo) rate based on an assessment of the current and evolving macroeconomic situation and modulation of liquidity conditions to anchor money market rates at or around the repo rate.' Instruments of Monetary Policy Various direct and indirect instruments are used by the RBI for implementing monetary policy, including Repo Rate, Reverse Repo Rate, Marginal Standing Facility (MSF) under the Liquidity Adjustment Facility (LAF), Bank Rate, Cash Reserve Ratio (CRR), Open Market Operations (OMOs) and Market Stabilisation Scheme (MSS). 📌 Liquidity Adjustment Facility (LAF): The LAF refers to the RBI's operations through which it injects or absorbs liquidity into or from the banking system. LAF is a facility extended by RBI to the scheduled commercial banks (excluding regional rural banks) and primary dealers to avail of liquidity in case of a requirement or park excess funds with RBI in case of excess liquidity on an overnight basis against the collateral of G-Secs, including state development loans (SDLs). 📌 Repo Rate: It is the interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the LAF. It is the policy rate decided by the Monetary Policy Committee (MPC). 📌 Reverse Repo Rate: It is the interest rate at which the Reserve Bank absorbs liquidity, on an overnight basis, from banks against the collateral of eligible government securities under the LAF. 📌 Marginal Standing Facility (MSF) Rate: It is the rate at which a bank can borrow, on an overnight basis, from the RBI in an emergency situation when inter-bank liquidity dries up completely. It is typically placed at 25 basis points above the policy repo rate. 📌 Standing Deposit Facility (SDF) Rate: It is the rate at which the RBI, on an overnight basis, accepts uncollateralised deposits from all liquidity adjustment facility (LAF) participants. The SDF is also a financial stability tool in addition to its role in liquidity management. It was introduced in 2022 to replace the fixed-rate reverse repo (FRRR) as the floor of the liquidity adjustment facility corridor. 📌 Main Liquidity Management Tool: To manage the frictional liquidity requirements, a 14-day term repo/reverse repo auction operation at a variable rate is conducted to coincide with the cash reserve ratio (CRR) maintenance cycle. 📌 Bank Rate: In case of shortfalls in meeting the reserve requirements (cash reserve ratio and statutory liquidity ratio) by the banks, the Reserve Bank provides to buy or rediscount bills of exchange or other commercial papers at a rate which is called 'bank rate'. 📌 Cash Reserve Ratio (CRR): It is the percentage of a bank's net demand and time liabilities (NDTL) that is required to be maintained in liquid cash with the RBI as a reserve. The RBI determines the CRR percentage from time to time. 📌 Statutory Liquidity Ratio (SLR): Every bank is required to maintain Indian assets, the value of which shall not be less than such a percentage of the total of its demand and time liabilities in India as of the last Friday of the second preceding fortnight, in the form of liquid cash, gold, and government and state government securities. 📌 Open Market Operations (OMOs): These include outright purchases or sales of government securities by the Reserve Bank for injection or absorption of durable liquidity in the banking system. 📌 Market Stabilisation Scheme (MSS): This instrument for monetary management was introduced in 2004. Surplus liquidity of a more enduring nature arising from large capital inflows is absorbed through the sale of short-dated government securities and treasury bills. Depending upon the nature of the surplus liquidity (long-term/short-term), the securities under MSS (long-term dated securities/short-term CMBs) are issued. The cash so mobilised is held in a separate government account with the Reserve Bank. Monetary Policy transmission through the Repo Rate According to the official site of the RBI, 'Monetary transmission is the process through which monetary policy impulses in the form of policy rate changes by a central bank are transmitted to the entire spectrum of interest rates, such as money market rates, bond yields, bank deposit and lending rates and asset prices, such as stock prices and house prices.' Let's understand how the repo rate change affects the liquidity in the economy and transmits the objective of the monetary policy. When the RBI wants to encourage economic activity in the economy, it reduces the repo rate. Doing this enables commercial banks to bring down the interest rates they charge (on their loans) as well as the interest rate they pay on deposits. This, in turn, incentivises people to spend money, because keeping their savings in the bank now pays back a little less, and businesses are incentivised to take new loans for new investments because new loans now cost a little less as well. When the RBI wants to control inflation, it increases the repo rate. Banks thus have to pay more interest to borrow from the RBI, which means they will charge more interest to their borrowers. At a macro level, this inhibits people from borrowing money as well as from spending, which in turn reduces the amount of money in the market, and thus negates inflation. Monetary Policy Committee Under Section 45ZB of the amended RBI Act, 1934, the central government is empowered to constitute a six-member Monetary Policy Committee (MPC) to determine the policy interest rate required to achieve the inflation target. It lays down that 'the Monetary Policy Committee shall determine the Policy Rate required to achieve the inflation target', and that 'the decision of the Monetary Policy Committee shall be binding on the Bank'. The first such MPC was constituted on September 29, 2016. Section 45ZB says the MPC shall consist of the RBI Governor as its ex officio chairperson, the Deputy Governor in charge of monetary policy, an officer of the Bank to be nominated by the Central Board, and three persons to be appointed by the central government. The last category of appointments must be from 'persons of ability, integrity and standing, having knowledge and experience in the field of economics or banking or finance or monetary policy'. (Section 45ZC) The MPC is required to meet at least four times per year. The MPC meets with a quorum of four members. Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote. Do you know who the members of the RBI's Monetary Policy Committee (MPC) are? In 2017, UPSC asked a question on it. Do check it in the post-read questions. Both monetary policy and fiscal policy serve as critical tools for managing the economy of our country; thus, it becomes crucial to understand the differences between these policies for comprehending how economic decisions are made and impact various sectors. One key distinction between monetary and fiscal policy lies in their implementation authorities and tools. Monetary policy is formulated and implemented by the RBI, which primarily focuses on regulating the money supply, interest rates, and inflation levels. The RBI uses monetary policy instruments such as the repo rate to manage liquidity in the financial system. On the other hand, the government makes decisions pertaining to fiscal policy, and the Ministry of Finance plays a central role in formulating budgets, tax policies, and expenditure plans. The government employs fiscal policy to manage aggregate demand, promote growth, and address socioeconomic challenges. Additionally, monetary policy tends to affect borrowing costs and financial markets more immediately, which affects investment and consumption patterns. Fiscal policy measures, on the other hand, such as tax reforms or infrastructure spending, may have longer-term and more extensive effects on economic development and growth. An independent central bank plays a critical role in the macroeconomic management of the country. Coordination between monetary and fiscal policies is critical for the economy and for creating a 'Viksit Bharat'. — Express View on 90 years of RBI The RBI as a central bank is not only mandated to keep inflation or prices in check through monetary policy, but it is also supposed to manage the borrowings of the Government of India and state governments; supervise or regulate banks and non-banking finance companies; and manage the currency and payment systems While carrying out these functions or operations, the RBI registers profits. Generally, the central bank's income comes from the: (i) Returns earned on its foreign currency assets, which could be in the form of bonds and treasury bills of other central banks or top-rated securities, and deposits with other central banks. (ii) Interest on its holdings of local rupee-denominated government bonds or securities, and while lending to banks for very short tenures, such as overnight. (iii) It claims a management commission on handling the borrowings of state governments and the central government. Whereas, RBI's expenditure is mainly on the printing of currency notes and staff, besides the commission it gives to banks for undertaking transactions on behalf of the government across the country, and to primary dealers, including banks, for underwriting some of these borrowings. As the RBI isn't a commercial organisation like the banks or other companies that are owned or controlled by the government – it does not, as such, pay a 'dividend' to the owner out of the profits it generates. Although the RBI was promoted as a private shareholders' bank in 1935 with a paid-up capital of Rs 5 crore, the government nationalised it in January 1949, making the sovereign its 'owner'. What the central bank does, therefore, is transfer the 'surplus' – that is, the excess of income over expenditure – to the government, in accordance with Section 47 (Allocation of Surplus Profits) of the Reserve Bank of India Act, 1934: After making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation fund [and for all other matters for which] provision is to be made by or under this Act or which are usually provided for by bankers, the balance, of the profits shall be paid to the Central Government. The Central Board of the RBI does this in early August, after the July-June accounting year is over. Malegam committee In 2013, a technical committee of the RBI Board, headed by Y. H. Malegam, reviewed the adequacy of reserves and a surplus distribution policy and recommended a higher transfer to the government. Earlier, the RBI transferred part of the surplus to the Contingency Fund, to meet unexpected and unforeseen contingencies, and to the Asset Development Fund, to meet internal capital expenditure and investments in its subsidiaries, in keeping with the recommendation of a committee to build contingency reserves of 12% of its balance sheet. But after the Malegam committee made its recommendation, in 2013-14, the RBI's transfer of surplus to the government as a percentage of gross income (less expenditure) shot up to 99.99% from 53.40% in 2012-13. (1) Which of the following are the sources of income for the Reserve Bank of India? (UPSC CSE 2025) I. Buying and selling Government bonds II. Buying and selling foreign currency III. Pension fund management IV. Lending to private companies V. Printing and distributing currency notes Select the correct answer using the code given below. (a) I and II only (b) II, III and IV (c) I, III, IV and V (d) I , II and V (2) If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do? (UPSC CSE 2020) 1. Cut and optimize the Statutory Liquidity Ratio 2. Increase the Marginal Standing Facility Rate 3. Cut the Bank Rate and Repo Rate Select the correct answer using the code given below: (a) 1 and 2 only (b) 2 only (c) 1 and 3 only (d) 1, 2 and 3 (3) Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? (UPSC CSE 2017) 1. It decides the RBI's benchmark interest rates. 2. It is a 12-member body including the Governor of RBI and is reconstituted every year. 3. It functions under the chairmanship of the Union Finance Minister. Select the correct answer using the code given below : (a) 1 only (b) 1 and 2 only (c) 3 only (d) 2 and 3 only (Sources: 90 years of the RBI, Knowledge Nugget: RBI's Monetary policy instruments, , RBI approves record transfer 'surplus' to govt: Why does this transfer happen, and how?) Subscribe to our UPSC newsletter. Stay updated with the latest UPSC articles by joining our Telegram channel – Indian Express UPSC Hub, and follow us on Instagram and X. 🚨 Click Here to read the UPSC Essentials magazine for May 2025. Share your views and suggestions in the comment box or at
Economic Times
39 minutes ago
- Economic Times
Rs 11 lakh crore corporate capex beats govt capex; RIL top contributor: Report
Corporate capex by listed non-financial companies jumped 20% YoY to over Rs 11 lakh crore in FY25, exceeding the government's spending and reflecting broad-based growth, per ICICI Securities. While Reliance Industries led in scale despite flat growth, capex in telecom and RIL remained muted, underscoring the diversified nature of corporate investments this fiscal. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Corporate capex by listed non-financial companies surged 20% year-on-year to cross Rs 11 lakh crore in FY25, surpassing the central government's Rs 10.5 lakh crore spend and aligning with the NSO's latest corporate sector capex survey, according to a report by domestic brokerage firm ICICI Mukesh Ambani-owned Reliance Industries Ltd (RIL) led this surge despite reporting flat year-on-year growth, highlighting that the capex momentum was broad-based rather than growth remained muted in capital-intensive sectors such as telecom and RIL (the latter treated as a separate category due to the diversity and scale of its capex).ICICI Securities also noted that other major contributors to FY25's capex growth included companies in utilities, energy (excluding RIL), industrials, cement, auto, and healthcare sectors.'The hallmark of FY25's corporate capex spending pattern is its broad-based nature, with 157 corporates committing to capex of over USD 100 million—the highest number since 2013,' ICICI Securities the peak of the capex cycle in 2012, 175 listed companies had each committed to at least USD 100 million in capital expenditure (equivalent to Rs 4.8 billion then, compared to Rs 8.5 billion now). The overall capex-to-depreciation ratio has risen to around 2x, up from a low of 1.3x, indicating a renewed increase in discretionary capex major reason for sluggish credit growth despite the rise in capex in recent years has been the strong cash flow from operations (CFO) generated by listed companies, which peaked at over 2x capex in FY21, according to ICICI even with a robust CFO of Rs 16 trillion in FY25, the CFO-to-capex ratio declined to 1.5x, as capex growth outpaced cash generation—signaling a potential pickup in corporate loan demand going read: How 50 Bajaj Finance shares will turn into 500 by June 27. Explained Stating that fiscal and monetary policy conditions appear conducive for a pickup in the corporate capex cycle, domestic brokerage firm ICICI Securities noted that the government's fiscal deficit is expected to ease to 4.4% of GDP, thereby reducing pressure on credit markets and creating space for private capex funding. Despite a lower overall outlay, government capex touched Rs 7.5 trillion between late FY25 and early FY26, with frontloading likely to push FY26 estimates even monetary policy has remained growth-oriented since December 2024, with 50 basis points in CRR cuts already implemented and another 100 basis points expected. So far this year, 100 basis points in repo rate cuts have also been on the outlook, ICICI Securities said the domestic policy environment has gone into overdrive to revive capex, with strong support from both fiscal and monetary fronts. The onus now lies on the corporate sector to "ignite its animal spirits" and drive the next leg of the capex the global environment remains uncertain due to geopolitical tensions, there are signs that India may benefit from shifting global supply chains away from read: Asian Paints shares see Rs 7,700 crore block deal, stock up over 2%
