RBI Monetary Policy - new norms for Banks

RBI has recommended that banks to keep the NPA coverage ratio at 70%, including floating provisions. The step was taken in view of the wide disparity on NPA provisioning ratios by different banks.

to advise banks to augment their provisioning cushions consisting of specific provisions against NPAs as well as floating provisions, and ensure that their total provisioning coverage ratio, including floating provisions, is not less than 70 per cent. Banks should achieve this norm not later than end-September 2010.

RBI

The SLR (statutory liquidity ratio) has been hiked by 1% to 25%. SLR is the portion of its deposits that banks are required to invest in government securities. The much expected rise in interest rates has, however, been kept out of the monetary policy announced on 27 Oct 2009.

Wholesale Price Index (WPI) to be released on monthly basis

The Cabinet Committee on Economic Affairs has approved a proposal to the effect that the Department of Industrial Policy & Promotion will release the current series of Wholesale Price Index (wpi) is calculated on a monthly basis.

Presently WPI is released on a weekly basis.

The compilation of the price index of primary articles and commodities will, however, continue to be a weekly event. This the cabinet believes will allow for better monitoring of the prices of sensitive commodities and products.

WPI is used to calculate inflation - a key monetary policy input.

Divestment in NTPC approved

Indian Cabinet has approved the disinvestment of 5% of National Thermal Power Corporation Limited (NTPC) and 10% of Satluj Vidyut Nigam Limited.

The Government expects to raise about Rs. 8000 crore through the NTPC stake sale. NTPC is already a listed company with a market capitalization of Rs 1,72,000 crores and after this disinvestment of 5% the government's share in the company will come down to 84.5%.

Satluj Vidyut Nigam is a joint venture hydro-electicity generation ulitity of the Central Government (75%) and the State Government of Himachal Pradesh (25%).

The disinvestment proceedings of these companies will go into making up the budget deficit.

US government says budget deficit 1.4 trillion dollars

US government has posted released in a joint statement by Tim Geithner and Peter Orszag that its budget deficit is a whopping 1.4 trillion dollars.

U.S. Treasury Secretary Tim Geithner and White House Office of Management and Budget (OMB) Director Peter R. Orszag today released details of the final Fiscal Year 2009 budget results. In the statement the top financial bosses of the country have tried to emphasize on how the budgetary deficit has been below projections.

In the statement, they seem to be patting themselves in the back for the federal

deficit drop of $162 billion from a projected $1,580 billion in the August Mid-Session

Review (MSR) to the final figure of $1,417 billion.

According to the statement receipts for the fiscal year totaled $2,105 billion, while outlays totaled $3,522 billion taking Federal borrowing from the public net of financial assets up by $1,417 billion during FY2009, to $6,711 billion or 47.2 percent of GDP.

Click here to see the full copy of the statement.

India's Foreign Exchange Reserves for 09 Oct 2009

Reserve Bank of India's weekly statistical supplement released on 16 October 2009 indicates that the county's foreign exchange (FX) reserve on 09 October 2009 stood at $281.86 compared to $280.34 for the previous week.