Latest news with #SanjayMalhotra
Business Recorder
18 hours ago
- Business
- Business Recorder
India bonds inch up before state debt supply, US rate decision
MUMBAI: Indian government bonds edged higher in early deals on Tuesday after a two-day selloff, while volumes remained muted ahead of the state debt supply and the U.S. rate decision due a day later. The yield on the benchmark 10-year bond was at 6.3631% at 10:25 a.m. IST, compared with the previous close of 6.3700%. Bond yields move inversely to prices. Traders said the benchmark bond yield was unable to break past a key technical upside level, so there is some reversal in trend. Investors took a break from selling, which was triggered by falling bets of an immediate rate cut following hawkish commentary from the Reserve Bank of India Governor Sanjay Malhotra. On Friday, Malhotra said that the monetary policy will place greater emphasis on the outlook for growth and inflation, rather than their current levels. India bonds extend fall as August rate-cut bets fade 'Traders are mostly on the sidelines till the RBI policy decision as there is no incentive for taking positions,' a trader at a state-run bank said. 'Focus is on U.S. Fed Chair Jerome Powell's commentary, which could give more cues on domestic policy easing cycle for FY25.' The Federal Reserve is widely expected to keep interest rates unchanged on Wednesday. Meanwhile, Indian states are aiming to raise 300 billion rupees ($3.46 billion) via bond auctions later in the day, slightly exceeding the scheduled amount. Rates India's overnight index swap (OIS) rates saw receiving pressure in early trades, as the 10-year bond yield failed to breach key technical level, spurring some buying. The one-year rate dropped 2 basis points to 5.52%, while the two-year OIS rate fell 2 basis points to 5.50%. The liquid five-year OIS rate was down 1 basis point at 5.73%.
Mint
20 hours ago
- Business
- Mint
RBI's message is clear: Corporate houses shouldn't expect banking licences
In a world where change is said to be the only constant, it's good to know that some things do not change. The Reserve Bank of India's (RBI) long-held policy of keeping corporates out of banking, for instance. 'There is no proposal to allow corporates, either directly or through non-banking finance companies, to obtain banking licences," said RBI Governor Sanjay Malhotra last week. He cited an 'inherent conflict of interest with a group actually dealing with the money of depositors." So there we have it—spelt out in clear terms by none other than the chief of India's bank licensing authority. Hopefully, this enunciation of RBI's position will deliver respite from a notable reality ever since the sector was opened to new entrants: incessant lobbying by corporate houses eager to open banks. Also Read: Well done, RBI, stay firm on bank licences In 2020, it may be recalled, RBI had released the report of an internal working group tasked with reviewing the extant ownership guidelines for private banks and their corporate structure. The group's advice was that large corporate or industrial houses may be allowed to act as bank promoters only after necessary amendments were made to the Banking Regulation Act of 1949 to prevent connected lending in particular and the exposure of such banks to other group entities, financial or non-financial, in general; plus, the sector's supervisory mechanism had to be strengthened first. Neither has happened. Although RBI has been tightening supervision, it is nowhere near fool-proof. We have also not seen any movement on another key recommendation of that report: that a 'non-operative financial holding company' structure be preferred for all new licences issued for universal banks. Wisely, RBI has maintained the status quo on corporate entry. Also Read: Banking on trust, losing billions: India's bank fraud epidemic needs urgent answers The argument that India's banking sector is small relative to its GDP in comparison with other countries in its peer group and we must therefore let corporations start banks is not persuasive. Other sources of finance such as equity, corporate bonds and loans from non-bank financial companies have emerged in a big way in recent years. Moreover, India is not the only country that bars corporations from banking. In the US, for example, commercial enterprises are not allowed to own banks—in line with the principle of keeping banking and commerce apart. The same rationale applies here too. Also Read: G.N. Bajpai: India's banking industry needs a complete organizational revamp While safeguards exist, such as a stipulated cap on the stake of promoters as a percentage of the bank's paid-up equity capital eligible for voting (26% currently), the reality is that rules designed to prevent concentration of control can be circumvented. We can never be too careful when it comes to ensuring the safety of public savings and securing people's trust in the banking system, which serves as the bedrock of a modern economy. And that requires two conditions to be fulfilled: One, ownership should be wide and diversified; and two, there must be no scope for conflicts of interest. Sure, we could do with more and larger banks. But, as the working group report noted back in 2020, capital has not been a constraint for private banks. With the Indian economy averaging an annual growth rate of 7.2% in the past three years, that position has only changed for the better. Public sector banks are better placed too. State Bank of India's recent qualified institutional placement aimed to raise ₹25,000 crore but attracted bids of ₹1.12 trillion, 64% of it from foreign investors. This suggests that our banking sector is doing quite well, thank you, without the entry of corporate houses.
Business Recorder
a day ago
- Business
- Business Recorder
India bonds extend fall as August rate-cut bets fade
MUMBAI: Indian government bonds fell for a fifth straight session on Monday, as investors scaled back bets of an interest rate cut in the near term following comments from the central bank chief. The yield on the benchmark 10-year bond ended at 6.3700%, compared with Friday's close of 6.3505%. The yield has risen about 7 basis points in the last five sessions. Bond yields move inversely to prices. Reserve Bank of India Governor Sanjay Malhotra on Friday told Financial Express in an interview that monetary policy will place greater focus on the outlook for growth and inflation, rather than their current levels. Malhotra added that the bar for further easing is higher than it would have been if the stance was 'accommodative'. Traders had expected easing inflation to lead to another rate cut. Still, a majority of economists polled by Reuters expect the central bank to keep rates on hold when it announces its next policy decision on August 6. India's ABSL AMC ups long-duration government bond bets, sees more rate easing 'Bond markets traded in a narrow range with a weakening bias on receding expectations of an additional rate cut(s) by the RBI after marginally hawkish commentary by the Governor,' said Upasna Bhardwaj, chief economist at Kotak Mahindra Bank. Investors also await the Federal Reserve's policy decision, due on Wednesday. The U.S. central bank is widely expected to keep rates unchanged. Rates India's overnight index swap rates rose marginally as sentiment soured in the derivatives market. The one-year OIS rate ended at 5.54% and the two-year OIS rate at 5.52%. The liquid five-year OIS rate settled at 5.74%.
News18
2 days ago
- Business
- News18
PHDCCI suggests RBI measures to improve credit access for MSMEs
New Delhi, Jul 28 (PTI) A delegation from industry lobby PHDCCI met RBI Governor Sanjay Malhotra and suggested a set of policy reforms aimed at enhancing credit access, regulatory support, and financial efficiency for India's Micro, Small, and Medium Enterprises (MSMEs). The meeting was held last Friday at the RBI headquarters in Mumbai. 'The chamber appreciated the Union Government's move to expand credit guarantee schemes and urged the RBI to ensure effective implementation. To that end, it was suggested that RBI should create designated help desks at field offices level to support MSMEs facing credit access challenges," PHDCCI said. A key recommendation included streamlining and rolling out the proposed Micro Credit Facility Cards, announced in the Union Budget, with a Rs 5 lakh limit each. PHDCCI proposed renaming them to distinguish from consumer credit cards, standardizing issuance procedures, ensuring interest rate caps, and launching a centralised portal for monitoring card applications. The industry lobby also stressed upon the need to digitise and standardise banking documentation across institutions to reduce physical paperwork and promote transparency. In a push for inclusive financing, PHDCCI advocated for removing the current Rs 20 lakh cap on Priority Sector Lending classification for credit through NBFCs, requesting an increase to at least Rs 1 crore to support working capital needs in line with revised MSME definitions. Besides the above recommendations, some key points were also discussed in the meeting including extension and expansion of the Interest Equalization Scheme to cover service exporters, aligning with India's ambitious USD 1 trillion export target. The chamber also pitched for faster clearance of deposited cheques, suggesting a 24-48 hour credit window to ease cash flow for MSMEs; and sought regulatory intervention against 'unfair practices by credit rating agencies, particularly those demanding advance fees and NOCs for rating withdrawal". It also called upon the RBI for revision of NPA classification norms, recommending an extension of the overdue threshold from 90 to 180 days to reflect realistic MSME working capital cycles. PTI RSN HVA view comments First Published: Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Yahoo
2 days ago
- Business
- Yahoo
Reserve Bank of India governor rules out issuance of banking licences to corporates
The Reserve Bank of India (RBI) governor Sanjay Malhotra has ruled out granting banking licences to corporate entities or their non-banking financial companies, citing an inherent conflict of interest that could endanger public deposits. Malhotra clarified that no proposals are under consideration to allow corporates into banking, emphasising the importance of separating banking operations from corporate ownership to maintain trust and protect depositor funds. Speaking at a fireside chat hosted by The Financial Express, he also addressed promoter holdings in private sector banks, stating that the RBI has no plans to revise the 26% voting rights cap outlined in the Banking Regulation Act, as it promotes diversified ownership for effective checks and balances. However, he noted that foreign banks can hold up to 100% ownership, provided they comply with regulatory approvals and norms. On corporate governance, Malhotra stressed that bank boards bear the ultimate responsibility for operations. "The board cannot be held responsible for each and every misdemeanour or episode,' he was quoted as saying by The Times of India, adding boards must "be vigilant and ensure that the money that the depositors, many of them small, have entrusted with them is kept safe.' Additionally, he highlighted the RBI's efforts to promote the international use of the Indian rupee through trade settlement and currency agreements. He outlined operational arrangements already in place with countries like the UAE and ongoing discussions with others, such as the Maldives. Meanwhile, earlier this month, the Indian apex bank issued an advisory to banks for the integration of the Financial Fraud Risk Indicator, a tool developed by the Department of Telecom (DoT), to reduce online financial frauds. "Reserve Bank of India governor rules out issuance of banking licences to corporates" was originally created and published by Retail Banker International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
