to resume sale of market stabilisation bonds to suck out
the reserve bank of india (rbi) will resume sale of
bonds under the market stabilisation scheme (mss) to absorb
excess liquidity in the banking system and thereby ease
rbi will sell rs6,000 crore of 2-year bonds, rs1,00 crore
of 91 day bills and rs1,000 crore of 182 day bills next
week to absorb surplus cash from the banking system. the
announcement came after the markets closed.
will announce each friday the amount of market stabilisation
bonds (mss) that it plans to sell the following week.
will be in addition to the surplus cash rbi absorbs through
reverse repo auctions paying the banks a rate of 6 per
cent. while there were no repo limits until now, rbi now
plans to absorb a maximum of rs2,000 crore in its morning
reverse repo auction every day and a maximum of rs1,000
crore through the evening auction.
move is the latest in a string of fiscal and monetary
measures taken by the authorities over the past few months
to tame rising inflation.
foreign currency reserves have risen since early january
by about $16 billion to $193.14 billion as of february
23. the latest move should help sterilise surplus cash
pumped into the banking system by the rbi's currency market
intervention to cap the rupee amidst rising forex inflows.
10-year bond yield ended at 7.94 per cent on friday and
analysts saw it rising 25 basis point in a week.
last sold mss bonds in august 2005, although it issues
treasury bills under the scheme at weekly auctions, and
data shows outstanding issuance is around rs45,500 crore.
market stabilisation bonds were introduced in april 2004
mainly to absorb surplus liquidity pumped into the system
due to strong capital flows.
26 february 2007
more operational freedom for banks, competition commission
the competition commission of india (cci) has asked the
reserve bank to allow commercial banks operational freedom
in areas like branch expansion and opening of new atms,
in order to unshackle the banking sector.
one-man competition commission comprising vinod dhall
recently made a presentation to rbi top brass in mumbai
expressing concern over the lack of operational freedom
for the banks, which, the commission pointed out, is stifling
competition among them.
the existing norms, banks are required to seek rbi's permission
for every small operational matter, including opening
new branches, their location and size.
banks are required to seek permission even on matters
like whether the atm would be located on the ground floor
or the first floor of a building," cci said in its
parameters like interest rates on the saving accounts
are still regulated by the rbi leaving little scope for
mergers on the banks without determining its impact also
go against the spirit of free competition, the cci pointed
drive home its point, the cci pointed out the insurance
sector, which has seen an impressive growth with around
25 new players in a short span of time. against this,
the cci said, because of excessive regulation only two
new banks could open in the last 10 years.
reports on finance diary