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POLICY RATES TRANSMITTED…….REALLY! (Below created situations and conversations are purely imaginary; might or might not reflect reality; Intention is not to hurt anyone; if it hurts anyone, my sincere apologies to them) Regulator to Banker: Since 2019, we have reduced policy rates by 250 bps. Whether you have passed on the benefit to the customers?   Banker: Yes Sir. We have reduced the interest rates to our deposit customers. ·        On fixed deposits from 8.00 to 9.00 per cent in 2019 to 5.00 to 6.00 per cent now ·     Since repo rate is a daily rate impacting our call money and treasury bills rate, interest on demand deposit like savings is also reduced by 100 to 125 bps. Thanks to the transmission, we could improve our NIM and also the net interest income. This comes in handy to improve our operating profit, as the income stream is constant and is on the decline during this COVID TIME   Regulator to Government: Sir, whether ...

  RBI SHOULD WITHDRAW THE DISINCENTIVE FRAMEWORK IN PSL Reserve Bank of India has recently reviewed its priority sector lending (PSL) guidelines. In addition to traditional priority sectors like agriculture, MSME, education, housing, etc. Social Infrastructure, Renewable Energy, export credit to non-priority sector up to a certain per cent and Co-origination of lending by Banks and NBFCs have been brought under eligible categories for PSL classification. As hitherto securitisation/assignment of assets, which were originated under eligible category for PSL, investments made in RIDF and other eligible funds with NABARD, NHB, SIDBI in lieu of non-achievement of PSL and outstanding PSLCs (Prioirty Sector Lending Certificates) will be included for PSL calculations. Overall PSL achievement of 40% of ANBC/CEOBE by domestic/foreign banks and 75% of ANBC/CEOBE by RRBs/SFBs, with sub-ceiling for each category is retained. For the first time, in calculation of PSL targets, incentive and d...

 Tax Relief to senior citizens  Good morning. One should never be at the mercy of anyone, especially senior citizens. We should pray God to gift us that life.  Some suggestions on providing tax relief to senior citizens. Their spends are simple and straight forward. 1. Pay for conveyance for local trips either thro ola/uber or engage temp driver and incur petrol expenses  2. If still mobile, make two to three trips domestic or abroad  3. Pay for regular illnesses like sugar, BP or cholestrol and annual medical check ups.  4. Incur expenses as rent or maintenance if they stay in senior citisen homes. 5. Donate for charities to get solace.  The above are the five major monetary expenses for which the government can announce tax relief for those senior citizens in the tax category.  Those who are not that fortunate to have a taxable income still in that age, subsidy or grant towards their medical expenses should be thought of.  Someone influe...

  Developmental and Regulatory Policies – Oct 2020: Class Room It has become a new norm for the RBI to review the developmental and regulatory policies, whenever the Monetary Policy Report is announced after conduct of the Monetary Policy Meeting by the MPC (Monetary Policy Committee). Ever since the onset of COVID, the changes in developmental and regulatory policies attract more attention of the media, analysts and the public including businesses, since they serve as enablers to implement/supplement the policy rate changes. In fact, the governor’s statement on 9 th Oct 2020, was widely read and commented due to the innovations brought in the regulatory policies, though status quo was maintained on policy rates.   I share my understanding on the likely impact. 1.     On Tap TLTRO Facility: up to Rs.100,000 cr. for tenors up to 3 years, available till Mar 31, 201 with flexibility to enhance the amount and extend the last date, depending on the response to ...

  Dhanlaxmi Bank in the news Dhanlaxmi Bank (dhanbank) was in the news recently on account of two exceptional events. RBI took the rarest of the rare move in advising the bank’s board to terminate the services of its CGM Shri P.Manikandan in the third week of September 2020. Before the dust settled down, the shareholders of the bank sprang a surprise, by rejecting the resolution on appointment of Shri Sunil Gurbaxani, as the bank’s MD &CEO, in their annual general meeting (AGM).   Since this closely followed the events in the AGM of LVB (Lakshmi Vilas Bank), which also rejected the appointment of their MD& CEO, everyone was tempted to draw parallels between the two banks. However to the credit of dhanbank, its financials are on a much stronger footing than LVB, which reported negative core equity for the quarter ended 30 th June 2020.   Naturally, anyone will be interested to know the reasons for rejecting the appointment of MD & CEO, whose name was appro...