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  Field Day for Defaulters and Bankers face the music This is based on a short Tamil story that appeared in ‘Dinamani Kadir’, a weekly supplement attached to the most respected Tamil Newspaper 'Dinamani', today, the 27th August 2023. Logu : “Sekar, I am telling you time and again, that I do not have Rs.1000 (Rupees Thousand only), but you keep  on torturing me to give it some how” Sekar: “ Okay Logu. At least give Rs.500 (Rupees Five hundred only) now. Very Urgent. I have some unexpected expenses. With the amount you give only, I have to manage, till I get the next month pay.” Logu: Whichever way you ask: cry, beg or whatever. My answer is simple. I don’t have even five rupees. Please go. Sekar, returning dejectedly, murmuring to himself: “It is six months, since I gave the loan to Logu. I am trying my level best to get it back. Initially, he was apologetic. Then, he was becoming tough. Not accessible. And now, even if I manage to trace him, so indifferent” When I read the abo...

RBI Governor Statement on MPC Discussions 1. Is there any invisible stress in the financial sector?  Reserve Bank of India (RBI) Governor, normally, comes out with a statement of decisions taken by the Monetary Policy Committee (MPC), after the meeting of MPC is over, reviewing the repo rate in the light of prevailing inflation rate, international and domestic developments that might influence inflation positively or negatively. On 10 th  August 2023, he announced that the repo rate  is unchanged and that the monetary policy stance continues to be  "remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth" . He mentioned “ During tranquil and good times that vulnerabilities may creep in. Hence, buffers are best built up during these periods. A stable financial system is a prerequisite for price stability and sustained growth. This is a shared responsibility in which regulated entities ...

  Why MPC should keep repo rate and stance unchanged  As we had seen in the minutes of the earlier Monetary Committee Meetings (MPC) of RBI, certain external and domestic factors influence the decision of MPC, while it reviews the policy rate and monetary policy stance. While FED fund rate, Current Account Deficit (CAD), average crude oil price, net FPI and NRI inflows/outflows are the major external factors taken up for discussion, CPI inflation, fiscal deficit, liquidity position and credit growth in the banking space and GDP are some of the domestic issues that get debated in the review meetings of CPC. 1. On the external front, though FED raised the fund rate by 25 bps, the statement from its Chairman that (i) consumer and labour market conditions are encouraging and (ii) there is no fear of recession now, even though the growth might be slower, has largely calmed down the international market. And  the fact that personal consumer expenditure (PCE) in US has declined ...