Category: Financial Prudence

Ministry of Finance

Auction for Sale (Re-issue) of (i) ‘4.26% GS 2023’,(ii) ‘6.10% GS 2031’ and (iii) ‘6.76% GS 2061’

Posted Date:- Jul 19, 2021

The Government of India (GoI) has announced the Sale (re-issue) of
(i) ‘4.26% Government Security, 2023’ for a notified amount of Rs 3,000 crore (nominal) through price based auction using uniform price method (ii) ‘6.10% Government Security, 2031’ for a notified amount of Rs 14,000 crore (nominal) through price based auction using uniform price method; and (iii) ‘6.76% Government Security 2061’ for a notified amount of Rs 9,000 crore (nominal) through price based auction using multiple price method. GoI will have the option to retain additional subscription up to Rs 6,000 crore against above security/securities. The auctions will be conducted by the Reserve Bank of India, Mumbai Office, Fort, Mumbai on Friday i.e. July 23, 2021.

Up to 5% of the notified amount of the sale of the Securitieswill be allotted to eligible individuals and Institutions as per the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities.

Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on July 23, 2021. The non-competitive bids should be submitted between 10.30 a.m. and 11.00 a.m. and the competitive bids should be submitted between 10.30 a.m. and 11.30 a.m.

The result of the auctions will be announced on July 23, 2021 (Friday) and payment by successful bidders will be on July 26, 2021 (Monday).

The Securities will be eligible for “When Issued” trading in accordance with the guidelines on ‘When Issued transactions in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI/2018-19/25 dated July 24, 2018 as amended from time to time.

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Ministry of Finance

Bad Bank launched for stressed assets as a measure to clean up bank books

Posted Date:- Jul 19, 2021

The Government has launched a Bad Bank with all the regulatory approvals in place. This was stated by Minister of State for Finance Dr Bhagwat Kisanrao Karad in a written reply to a question in the Lok Sabha today.

The Finance Minister Smt. Nirmala Sitharaman, in her speech on the Budget for the financial year 2021-22, had made the following announcement:

“The high level of provisioning by public sector banks of their stressed assets calls for measures to clean up the bank books. An Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realization.”

The Minister stated that Indian Banks’ Association (IBA) has apprised with regard to incorporation of the National Asset Reconstruction Company Limited (NARCL) that NARCL has been registered with the Registrar of Companies on 7.7.2021.

The Reserve Bank of India, being the regulator of Asset Reconstruction Companies (ARCs), has already prescribed a regulatory framework for the functioning of ARCs and there are well-laid norms for transfer of stressed assets by banks and non-banking finance companies to ARCs. Identification of non-performing assets by an ARC is an ongoing process, the Minister stated.

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Ministry of Finance

India emerges as 5th largest forex reserves holder in the world with $608.99 billion as on June 25, 2021

Posted Date:- Jul 19, 2021

With India’s forex reserves at $608.99 billion as on June 25, 2021 stood, India has emerged as the fifth largest foreign exchange reserves holder in the world after China, Japan, Switzerland and Russia. This was stated by Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in the Lok Sabha today.

The Minister stated that India’s foreign exchange reserves position is comfortable in terms of import cover of more than 18 months and provides cushion against unforeseen external shocks. Government and RBI are closely monitoring the emerging external position calibrating policies or regulations to support robust macroeconomic growth.

Giving more details, the Minister said that RBI takes regular steps for diversification of forex reserves by scaling up operations in forex swap and repo markets, acquisition of gold and exploring new markets/products, while adhering to safety and liquidity standards. Variation in India’s forex reserves is primarily the outcome of RBI’s intervention in the foreign exchange market to smoothen exchange rate volatility, valuation changes due to movement of US dollar against other international currencies in the reserve basket, movement in gold prices, interest earnings from deployment of foreign currency assets and inflow of aid receipts.

The Minister further stated that a current account deficit, accompanied by increasing foreign exchange reserves, reflects a surplus on the balance of payments i.e., the magnitude of the net capital inflows exceeds the volume of the current account deficit. In 2020-21, India’s balance of payments recorded surplus in both current account and capital account which contributed to the increase in foreign exchange reserves during the year.

Besides exports and imports of goods and services, the overall stability of the external sector depends on other components of balance of payments including remittances (transfers), income in the current account, the size of net capital flows and external debt. India is comfortable in most of these external sector vulnerability indicators, the Minister said.

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RM/MV/KMNRelease Id :-1736885

The Government has taken a number of steps to facilitate digital banking, doorstep banking services and digital lending platforms. This was stated by Minister of State for Finance Dr Bhagwat Kisanrao Karad in a written reply to a question in the Lok Sabha today.

Giving more details, the Minister stated that these services include, inter-alia, the following:
 

1. Initiation of digital lending has been made contactless through PSBloansin59minutes.com, using triangulation of credit bureau, income-tax and goods and services tax (GST) data, to provide online in principle approval for MSME loans.
2. Online bill discounting for MSMEs has been enabled on a competitive basis through Public Sector Banks (PSBs) onboarding onto the Trade Receivables Discounting System (TReDS) platform and the proportion of online discounted bills has grown rapidly.
3. Government’s ‘Jeevan Pramaan’ initiative for pensioners has enabled senior citizen pensioners the facility to update their annual life certificate online.
4. Under the Government-initiated PSB Reforms Agenda,—
    

1. Enhanced access to Mobile and Internet banking has been enabled through an increase in the average number of services offered (43), customer-friendly features (135) and regional language customer-interface (8);
2. End-to-end automated digital lending has been introduced in larger PSBs for unsecured personal loans (in five PSBs), loans to micro-enterprises (“Shishu Mudra”, in five PSBs) and renewals of loans to micro, small and medium enterprises (in three PSBs);
3. Digital retail loan request initiation through digital channels has been enabled in all the seven large PSBs, with retail disbursements from loan requests so initiated in the financial year (FY) 2020-21 amounting to Rs. 40,819 crore;
4. Customer-need-driven, analytics-based credit offers have been given an impetus, resulting in Rs. 49,777 crore of fresh retail loan disbursements by the seven larger PSBs in the financial year (FY) 2020-21.
               As a result, nearly 72% of financial transactions of PSBs are now done through digital channels, with doubling of customers active on digital channels from 3.4 crore in FY2019-20 to 7.6 crore in FY2020-21, and the share of financial transactions undertaken through home and mobile channels has increased from 29% in FY2018-19 to 76% in FY2020-21.
    
5. PSB Alliance, an initiative of all PSBs and Indian Banks’ Association, has launched doorstep banking services for all customers, including senior citizens, through call centre (1800-121-3721 and 1800-103-7188), web portal (https://psbdsb.in/ and https://doorstepbanks.com/) mobile app (Google Play Store). At present 13 services are being offered in 100 cities across the country, which include cash withdrawal or deposit, pick-up of cheque or demand draft or pay order etc., pick-up of cheque-book requisition slip, pick-up of income-tax forms no. 15G/15H, pick-up of income-tax/GST challan, and delivery of tax deduction at source (TDS) and Form-16 certificates for income-tax purposes.
    

The Minister further stated that there is no proposal under consideration of the Government for setting up of a Digital Banking Infrastructure Corporation (DBIC). As per inputs from banks, some PSBs have held discussions to set up a corporation to create a common digital infrastructure platform as a joint initiative of the banks, with a view to enable enhanced access to consumers and businesses for credit offerings.

Ministry of Finance Press release dated 19th July 2021

International Financial Services Centres Authority (IFSCA) has been established as a unified regulator to develop and regulate financial products, financial services, and financial institutions in the International Financial Services Centres (IFSCs) in India.

Global estimates suggest that there are one billion people in the silver generation (a global cohort of individuals aged 60 and older) with a combined spending power of $15 trillion and the size is ever expanding. Development in medicinal science and technology will support extending of lifespan and longevity of the silver generation. It is estimated that by 2040, there will be more members of the silver generation than people under 20. This demographic change will throw open new challenges and opportunities especially in the areas of wealth management, health, insurance, and other investment products.

IFSCA, in its endeavour to develop a Longevity Finance Hub in GIFT IFSC has constituted an Expert Committee to recommend approach towards development of Longevity Finance Hub and provide road map for the same.

The expert committee is being co-chaired by Ms. Kaku Nakhate, President and Country Head (India), Bank of America, and Mr. Gopalan Srinivasan, Ex-CMD, New India Assurance Company Limited. The committee members comprise of leaders from the entire longevity finance ecosystem including from areas such as banking, insurance, wealth management, FinTech, legal, compliance and management consultancy.

The constitution of the committee can be accessed through the following weblink:

https://ifsca.gov.in/IFSCACommittees

The International Financial Services Centres Authority (IFSCA) has been set up vide IFSCA Act, 2019 to develop and regulate the financial products, financial services and financial institutions in the International Financial Services Centres (IFSCs). Towards this end, IFSCA has issued a framework for Setting up and operating International Trade Finance Services Platform (‘ITFS’) for providing Trade Finance Services at International Financial   Services Centres (‘IFSCs’).

The framework will enable Exporters and Importers to avail various types of trade finance facilities at competitive terms, for their international trade transactions through a dedicated electronic platform viz, ITFS. This will help in their ability to convert their trade receivables into liquid funds and to obtain short term funding.

This framework will provide an opportunity to the participants to avail trade finance facilities for trade transactions such as Export Invoice Trade Financing, Reverse Trade Financing, Bill discounting under Letter of Credit, Supply Chain Finance for Exporters, Export Credit (Packing Credit), Insurance/ Credit Guarantee, Factoring and any other eligible product, on the ITFS platform.

The complete text of the Circular is available on the IFSC website at https://ifsca.gov.in/Circular

Ministry of Finance Press release dated 12th July 2021

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Government of India (GoI) has announced the Sale (Re-issue) of (i) ‘5.63% Government Security, 2026’ for a notified amount of Rs 11,000 crore (nominal) through price based auction using uniform price method (ii) ‘GoI Floating Rate Bonds, 2033’ for a notified amount of Rs 4,000 crore (nominal) through price based auction, using uniform price  method (iii) ‘6.64% Government Security, 2035’ for a notified amount of Rs10,000 crore (nominal) through price based auction, using uniform price method, and (iv) ‘6.67% Government Security, 2050’ for a notified amount of Rs7,000 crore (nominal) through price based auction using multiple price method. GoI will have the option to retain additional subscription up to `8,000 crore against the above Security/Securities. The auctions will be conducted by the Reserve Bank of India, Mumbai Office, Fort, Mumbai on Friday i.e.July 16, 2021.

Up to 5% of the notified amount of the sale of the Securities will be allotted to eligible individuals and Institutions as per the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities.

Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on July 16, 2021.

The non-competitive bids should be submitted between 10.30 a.m. and 11.00 a.m. and the competitive bids should be submitted between 10.30 a.m. and 11.30 a.m.The result of the auctions will be announced on July 16, 2021 (Friday) and payment by successful bidders will be on July 19, 2021 (Monday).

The Securities will be eligible for “When Issued” trading in accordance with the guidelines on ‘When Issued transactions in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI/2018-19/25 dated July 24, 2018 as amended from time to time.

Ministry of Finance Press release dated 12 July 2021

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The Government of India (GoI) has announced the Sale (Issue / re-issue) of
(i) ‘4.26% Government Security, 2023’ for a notified amount of Rs 3,000 crore (nominal) through price based auction, (ii) ‘New Government Security, 2031’ for a notified amount of Rs 14,000 crore (nominal) through yield based auction, and (iii) ‘6.76% Government Security 2061’ for a notified amount of Rs 9,000 crore (nominal) through price based auction. GoI will have the option to retain additional subscription up to Rs 6,000 crore against above security/securities. The auctions will be conducted by the Reserve Bank of India, Mumbai Office, Fort, Mumbai on July 09, 2021 (Friday) usinguniform price method for 4.26% GS 2023, New GS 2031 and multiple price method for 6.76% GS 2061.

Up to 5% of the notified amount of the sale of the Securities will be allotted to eligible individuals and Institutions as per the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities.

Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on July 09, 2021. The non-competitive bids should be submitted between 10.30 a.m. and 11.00 a.m. and the competitive bids should be submitted between 10.30 a.m. and 11.30 a.m.

The result of the auctions will be announced on July 09, 2021 (Friday) and payment by successful bidders will be on July 12, 2021 (Monday).

The Securities will be eligible for “When Issued” trading in accordance with the guidelines on ‘When Issued transactions in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI/2018-19/25 dated July 24, 2018 as amended from time to time.

MOF Press Release dated 05 July 2021

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