General Affairs
Centre Starts Process To Investigate $1.18 Million 'Bribery' In Highway Authority
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The government has initiated action on the reports alleging payment of US $1.18 million in bribes to the officials of the National Highways Authority of India or NHAI by an American firm, the Lok Sabha was informed today.
Road Transport and Highways Minister Nitin Gadkari said it was reported in media that M/S CDM Smith, through its employees and agents, and those of its wholly-owned Indian subsidiary (CDM India), had paid approximately US $1.18 million in bribes to government officials in India in exchange for highway construction supervision and design contracts.
The media report had emanated from the US Department of Justice, Criminal Division's letter dated June 21, 2017 available on their official website.
The minister said that the National Highways Authority of India (NHAI) has compiled the list of all the consultancy assignments awarded to the said firm and its associates. "The Ministry of Road Transport and Highways and the NHAI have initiated steps to obtain the supporting documents so as to take the matter to the logical conclusion," Mr Gadkari said during the Question Hour.
Mr Gadkari said his ministry has taken up the matter with the Ministry of External Affairs as well as the Indian Embassy in USA to liaise with the US Department of Justice to obtain the information and records gathered by them during their inquiry.
He said the NHAI had debarred the said firm for a period of three months in 2015 from participating or engagement in the future bidding of NHAI projects because of deficiency in the services in one of the projects -- the Dholpur-Morena Section of National Highway-3.
"Similarly, in a lone assignment awarded to the said firm, the NHIDCL has debarred the said firm this year for a period of two years," he said.
The relevant part of the US Department's letter says "From approximately 2011 until approximately 2015, employees of CDM Smith's division responsible for India operations and CDM India illegally paid bribes to officials in the National Highways Authority of India, India's state-owned highway management agency and an 'instrumentality' under the FCPA, in order to receive contracts from NHAI".
"The bribes generally were 2-4 per cent of the contract price and paid through fraudulent subcontractors, who provided no actual services and understood that payments were meant to solely benefit the officials," the letter had said.
Mr Gadkari said the Central Vigilance Commission of India has constituted a special investigation team of three officers to investigate the matter and report back to the commission.
Road Transport and Highways Minister Nitin Gadkari said it was reported in media that M/S CDM Smith, through its employees and agents, and those of its wholly-owned Indian subsidiary (CDM India), had paid approximately US $1.18 million in bribes to government officials in India in exchange for highway construction supervision and design contracts.
The minister said that the National Highways Authority of India (NHAI) has compiled the list of all the consultancy assignments awarded to the said firm and its associates. "The Ministry of Road Transport and Highways and the NHAI have initiated steps to obtain the supporting documents so as to take the matter to the logical conclusion," Mr Gadkari said during the Question Hour.
Mr Gadkari said his ministry has taken up the matter with the Ministry of External Affairs as well as the Indian Embassy in USA to liaise with the US Department of Justice to obtain the information and records gathered by them during their inquiry.
He said the NHAI had debarred the said firm for a period of three months in 2015 from participating or engagement in the future bidding of NHAI projects because of deficiency in the services in one of the projects -- the Dholpur-Morena Section of National Highway-3.
"Similarly, in a lone assignment awarded to the said firm, the NHIDCL has debarred the said firm this year for a period of two years," he said.
The relevant part of the US Department's letter says "From approximately 2011 until approximately 2015, employees of CDM Smith's division responsible for India operations and CDM India illegally paid bribes to officials in the National Highways Authority of India, India's state-owned highway management agency and an 'instrumentality' under the FCPA, in order to receive contracts from NHAI".
"The bribes generally were 2-4 per cent of the contract price and paid through fraudulent subcontractors, who provided no actual services and understood that payments were meant to solely benefit the officials," the letter had said.
Mr Gadkari said the Central Vigilance Commission of India has constituted a special investigation team of three officers to investigate the matter and report back to the commission.
Over 96,000 Cases Of Illegal Mining Reported In 2017: Piyush Goyal
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More than 96,000 cases of illegal mining for major and minor minerals were reported in various states, including Maharashtra, Madhya Pradesh and Andhra Pradesh, in 2016-17, Parliament was informed today.
The number of such cases was 1,10,476 in 2015-16.
In a written reply in the Lok Sabha, Mines Minister Piyush Goyal said state governments have been empowered to make rules for preventing illegal mining, transportation and storage of minerals.
As per the details based on the quarterly returns on illegal mining submitted by various states to the Indian Bureau of Mines (IBM), a total of 96,089 cases of illegal mining for major and minor minerals were reported in 2016-17.
Maharashtra reported the highest number of such cases (31,173) followed by Madhya Pradesh (13,880) and Andhra Pradesh (9,703).
The minister further informed that 20,569 FIRs have been registered during 2013-14 to 2016-17 and 2,13,650 vehicles were seized.
Also, 57,758 cases were filed in courts.
State governments realised fine of about Rs. 1,736.76 crore during the period.
Replying to another question, Mr Goyal said the mines ministry has taken the initiative to adopt the use of space technology through mining surveillance system to support state governments in curbing illegal mining.
The number of such cases was 1,10,476 in 2015-16.
In a written reply in the Lok Sabha, Mines Minister Piyush Goyal said state governments have been empowered to make rules for preventing illegal mining, transportation and storage of minerals.
Maharashtra reported the highest number of such cases (31,173) followed by Madhya Pradesh (13,880) and Andhra Pradesh (9,703).
The minister further informed that 20,569 FIRs have been registered during 2013-14 to 2016-17 and 2,13,650 vehicles were seized.
Also, 57,758 cases were filed in courts.
State governments realised fine of about Rs. 1,736.76 crore during the period.
Replying to another question, Mr Goyal said the mines ministry has taken the initiative to adopt the use of space technology through mining surveillance system to support state governments in curbing illegal mining.
Pakistan Constructing 6 Dams In PoK With China's Assistance: Government
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Pakistan is constructing six dams on the Indus river in PoK with China's assistance and India has made demarches to both Islamabad and Beijing conveying that it is in violation of its sovereignty and territorial integrity, the Rajya Sabha was informed today.
According to the government's information, Pakistan is constructing six dams on the Indus river in Pakistan-occupied Kashmir with assistance committed to those projects by China, Minister of State for External Affairs V K Singh said in a written reply.
"India has a clear and consistent position that these territories are illegally occupied by Pakistan and that any collaborative activity there is in violation of India's sovereignty and territorial integrity," he said.
"Accordingly, we have made demarches to both Pakistan and China conveying the position. The government will continue to maintain this position," Mr Singh added.
According to the government's information, Pakistan is constructing six dams on the Indus river in Pakistan-occupied Kashmir with assistance committed to those projects by China, Minister of State for External Affairs V K Singh said in a written reply.
"Accordingly, we have made demarches to both Pakistan and China conveying the position. The government will continue to maintain this position," Mr Singh added.
Sushma Swaraj's Take To Solve Doklam Standoff, With Jibe At Rahul Gandhi
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Foreign Minister Sushma Swaraj on Thursday pitched for patience and restraint in handling the Dokalam standoff with China diplomatically, telling parliament that war did not resolve problems and were followed by a round of dialogue.
"Wisdom is to resolve issues diplomatically," Ms Swaraj said. But as she got down to answering nearly every question that an aggressive opposition had raised during a discussion on foreign policy in the Rajya Sabha, she took a swipe at the Congress vice president Rahul Gandhi with a question of her own.
She asked why the Congress leader had gone to the Chinese envoy last month rather than coming to the Indian government. "I am very sad that leader of the largest opposition party deemed it proper to meet the Chinese envoy to get information about the standoff rather than approach the Indian leadership," Ms Swaraj said, referring to Mr Gandhi's meeting with the Chinese Ambassador Luo Zhaohui last month.
The Congress had initially denied the meeting but as the controversy acquired scale, Mr Gandhi tweeted that it was his job to be informed on critical issues.
In her detailed response, Ms Swaraj also responded to opposition demands that the government come out with its roadmap on Pakistan. "Talks and terror cannot go together. This is our roadmap," she asserted.
The foreign minister's response came at the end of a five-hour-long debate on foreign policy. The minister had made it clear right at the beginning that Prime Minister Narendra Modi would not respond to the debate as demanded by the opposition.
But PM Modi nevertheless remained the prime target of many opposition leaders including Congress' Anand Sharma.
The Congress leader had complained that PM Modi had never briefed parliament on his foreign visits though he had visited 65 countries in the last three years, some of them such as the United States as many as five times.
He also frowned at what he called were PM Modi's "boastful comments" on the surgical strikes across Pakistan-occupied Kashmir last year. "A mature large country does not make statements such statements (like 'We have isolated Pakistan')," he said, calling for meaningful engagement with Pakistan as a neighbour.
"Wisdom is to resolve issues diplomatically," Ms Swaraj said. But as she got down to answering nearly every question that an aggressive opposition had raised during a discussion on foreign policy in the Rajya Sabha, she took a swipe at the Congress vice president Rahul Gandhi with a question of her own.
The Congress had initially denied the meeting but as the controversy acquired scale, Mr Gandhi tweeted that it was his job to be informed on critical issues.
In her detailed response, Ms Swaraj also responded to opposition demands that the government come out with its roadmap on Pakistan. "Talks and terror cannot go together. This is our roadmap," she asserted.
But PM Modi nevertheless remained the prime target of many opposition leaders including Congress' Anand Sharma.
The Congress leader had complained that PM Modi had never briefed parliament on his foreign visits though he had visited 65 countries in the last three years, some of them such as the United States as many as five times.
He also frowned at what he called were PM Modi's "boastful comments" on the surgical strikes across Pakistan-occupied Kashmir last year. "A mature large country does not make statements such statements (like 'We have isolated Pakistan')," he said, calling for meaningful engagement with Pakistan as a neighbour.
Green Court Sends Notice To Centre On Plea To Ban Antimony Solar Panels
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A plea seeking a ban on the manufacture, use and import of solar panels containing antimony, a heavy metal, has prompted the National Green Tribunal (NGT) to seek the reply from the Centre and the pollution control board.
A bench headed by NGT Chairperson Justice Swatanter Kumar issued notice to the Ministry of New and Renewable Energy (MNRE), the Ministry of Commerce and the Central Pollution Control Board (CPCB) and sought their response before August 24.
Solar panels (also known as PV panels) are used to convert sunlight into electricity. The plea, filed by advocate Niharika, said with increasing use of solar modules and panels under the National Solar Mission, the scientific disposal of antimony posed several problems for the environment.
The petition claimed that antimony was at present being dumped in landfill sites along the solar panels which were crushed after use.
It sought a direction to the CPCB to amend the E-Waste Rules, 2016 and bring antimony within scope of Rules 16 pertaining to hazardous substances.
"Solar modules that could produce six gigawatts power were imported from China last year, and each GW had four million modules that weighed 52,000 tonnes," it said. The plea said that the CPCB should pass a direction to permit import of only those solar modules that do not contain antimony.
It also sought random sampling of the solar modules in the collaboration of an Indian Institute of Technology (IIT) to verify the existence of hazardous substances, including antimony.
The petition asked for a direction to the respondents and the environment monitoring agencies to immediately undertake remedial measures to limit the damage caused to the environment by submitting an action plan showing how to deal with future disposal of solar panels.
A bench headed by NGT Chairperson Justice Swatanter Kumar issued notice to the Ministry of New and Renewable Energy (MNRE), the Ministry of Commerce and the Central Pollution Control Board (CPCB) and sought their response before August 24.
The petition claimed that antimony was at present being dumped in landfill sites along the solar panels which were crushed after use.
"Solar modules that could produce six gigawatts power were imported from China last year, and each GW had four million modules that weighed 52,000 tonnes," it said. The plea said that the CPCB should pass a direction to permit import of only those solar modules that do not contain antimony.
It also sought random sampling of the solar modules in the collaboration of an Indian Institute of Technology (IIT) to verify the existence of hazardous substances, including antimony.
The petition asked for a direction to the respondents and the environment monitoring agencies to immediately undertake remedial measures to limit the damage caused to the environment by submitting an action plan showing how to deal with future disposal of solar panels.
Business Affairs
Bad loan resolution to start soon, RBI to take up more cases, Finance Minister Arun Jaitley tells Lok Sabha
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The process of resolution of bad loans will start shortly, Finance Minister Arun Jaitley said today in the Lok Sabha as it passed a bill which gives RBI the power to direct banking companies to resolve the problem of stressed assets.
Replying to a debate on the Banking Regulation (Amendment) Bill, 2017, Jaitley said the Reserve Bank has already identified top 12 loan defaulters and more cases will be taken up by them for resolution.
"No one can claim the right of equality in not paying banks back. RBI has taken up some difficult cases... I am sure they will take up more," Jaitley said.
The Banking Regulation (Amendment) Bill, 2017, seeks to amend the Banking Regulation Act, 1949 and replace the Banking Regulation (Amendment) Ordinance, 2017, which was promulgated in May this year. The bill was later passed by the Lok Sabha by a voice vote.
Winding up the debate on the bill, Jaitley said some laws were outdated and were acting as "impediment" instead of "expediting resolution".
"We will shortly see the process of resolution coming... Any form of resolution is possible... We need to save the companies, the jobs and we need liquid companies to pay the banks," the finance minister said.
Moving on fast-track, the RBI had in June identified 12 large loan defaulters who account for 25 per cent of the total bad loans in the banking sector.
Action under the Insolvency and Bankruptcy Code has already begun in certain cases, including Essar Steel, Bhushan Steel and Bhushan Power & Steel .
Jaitley said the loans were given during the boom period before the 2008 global financial crises and the present government is trying to find a solution of the non-performing loans.
Replying to opposition charge that bad loans are higher in public sector banks, Jaitley said PSU banks are leaders when it comes to lending for economic development and to industry. Private sector banks have safer portfolio and are more into retail banking, he said.
"There is a risk in industrial financing and PSU banks do it," he said.
With stressed assets reaching "unacceptably high level", the government had brought the Bill replacing the Ordinance.
The measure allows the RBI to initiate insolvency resolution process on specific stressed assets.
The RBI would also be empowered to issue other directions for resolution, appoint or approve for appointment, authorities or committees to advise the banking companies for stressed asset resolution.
The process of resolution of bad loans will start shortly, Finance Minister Arun Jaitley said today in the Lok Sabha as it passed a bill which gives RBI the power to direct banking companies to resolve the problem of stressed assets.
Replying to a debate on the Banking Regulation (Amendment) Bill, 2017, Jaitley said the Reserve Bank has already identified top 12 loan defaulters and more cases will be taken up by them for resolution.
"No one can claim the right of equality in not paying banks back. RBI has taken up some difficult cases... I am sure they will take up more," Jaitley said.
The Banking Regulation (Amendment) Bill, 2017, seeks to amend the Banking Regulation Act, 1949 and replace the Banking Regulation (Amendment) Ordinance, 2017, which was promulgated in May this year. The bill was later passed by the Lok Sabha by a voice vote.
Winding up the debate on the bill, Jaitley said some laws were outdated and were acting as "impediment" instead of "expediting resolution".
"We will shortly see the process of resolution coming... Any form of resolution is possible... We need to save the companies, the jobs and we need liquid companies to pay the banks," the finance minister said.
Moving on fast-track, the RBI had in June identified 12 large loan defaulters who account for 25 per cent of the total bad loans in the banking sector.
Action under the Insolvency and Bankruptcy Code has already begun in certain cases, including Essar Steel, Bhushan Steel and Bhushan Power & Steel .
Jaitley said the loans were given during the boom period before the 2008 global financial crises and the present government is trying to find a solution of the non-performing loans.
Replying to opposition charge that bad loans are higher in public sector banks, Jaitley said PSU banks are leaders when it comes to lending for economic development and to industry. Private sector banks have safer portfolio and are more into retail banking, he said.
"There is a risk in industrial financing and PSU banks do it," he said.
With stressed assets reaching "unacceptably high level", the government had brought the Bill replacing the Ordinance.
The measure allows the RBI to initiate insolvency resolution process on specific stressed assets.
The RBI would also be empowered to issue other directions for resolution, appoint or approve for appointment, authorities or committees to advise the banking companies for stressed asset resolution.
Savers as important as borrowers, says Kotak Mahindra Bank after SBI slashes interest rates on saving account
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Days after the top lender SBI slashed its savings account interest rate by 0.5 per cent due to excess liquidity, mid-size lender Kotak Mahindra Bank (KMB) today said it will continue with its elevated offerings.
The city-headquartered private lender said it will continue offering 5 per cent per annum for deposits of up to Rs 1 lakh and 6 per cent for those above it but up to Rs 1 crore.
"We feel this is the right time to build a retail franchise and the higher savings bank rates have helped us significantly over the last three to four years," its president for consumer banking Shanti Ekambaram told PTI.
The only revision the bank has done is a 0.5 per cent cut for savings account deposits between Rs 1 crore and Rs 5 crore to 5.5 per cent but Ekambaram was quick to add the rates for 99.9 per cent of KMB customers are unchanged.
"Borrowers matter so do savers. Kotak Mahindra Bank holds rates for savers up to 1 crore. 6 per cent continues for saving between Rs 1 lakh and Rs 1 crore," KMB vice- chairman and managing director Uday Kotak tweeted.
On July 31, SBI slashed interest rate on savings deposits by 50 bps to 3.5 per cent on balance up to Rs 1 crore, citing "muted credit demand and very high real interest rates".
The state-run lender's move was seen as a precursor to more banks adopting the same stance, even though there was increased interest on how the smaller private lenders, wanting to grow their customer base and looking at cross-sell opportunities, react to it.
It can be noted that such private sector lenders, including KMB, are growing their loan books at over 20 per cent as against sagging system growth.
Ekambaram said the blended cost of the savings account deposits for the bank stands at 5.5 per cent, as against the 6.75 or 7 per cent it would pay for a term deposit.
However, by paying the higher interest rates, it has been able to forge deeper client relationships and sell investment and loan products to them, she said, adding cross- sell is the "basic model" of a bank.
These include life insurance, general insurance and mutual funds on the investment side, and multiple forms of assets like home loans, she said.
Ekambaram said after demonetisation, there has been a large flow of savings into the formal economy, which needs to be routed to better-yielding investments through the savings account.
SBI had said that 60 per cent of the excess funds it received as deposits following demonetisation has gone out of the bank.
Ekambaram did not spell out anything on how long it will continue with the high offerings and said the bank has the choice to cut these rates whenever it wants.
Days after the top lender SBI slashed its savings account interest rate by 0.5 per cent due to excess liquidity, mid-size lender Kotak Mahindra Bank (KMB) today said it will continue with its elevated offerings.
The city-headquartered private lender said it will continue offering 5 per cent per annum for deposits of up to Rs 1 lakh and 6 per cent for those above it but up to Rs 1 crore.
"We feel this is the right time to build a retail franchise and the higher savings bank rates have helped us significantly over the last three to four years," its president for consumer banking Shanti Ekambaram told PTI.
The only revision the bank has done is a 0.5 per cent cut for savings account deposits between Rs 1 crore and Rs 5 crore to 5.5 per cent but Ekambaram was quick to add the rates for 99.9 per cent of KMB customers are unchanged.
"Borrowers matter so do savers. Kotak Mahindra Bank holds rates for savers up to 1 crore. 6 per cent continues for saving between Rs 1 lakh and Rs 1 crore," KMB vice- chairman and managing director Uday Kotak tweeted.
On July 31, SBI slashed interest rate on savings deposits by 50 bps to 3.5 per cent on balance up to Rs 1 crore, citing "muted credit demand and very high real interest rates".
The state-run lender's move was seen as a precursor to more banks adopting the same stance, even though there was increased interest on how the smaller private lenders, wanting to grow their customer base and looking at cross-sell opportunities, react to it.
It can be noted that such private sector lenders, including KMB, are growing their loan books at over 20 per cent as against sagging system growth.
Ekambaram said the blended cost of the savings account deposits for the bank stands at 5.5 per cent, as against the 6.75 or 7 per cent it would pay for a term deposit.
However, by paying the higher interest rates, it has been able to forge deeper client relationships and sell investment and loan products to them, she said, adding cross- sell is the "basic model" of a bank.
These include life insurance, general insurance and mutual funds on the investment side, and multiple forms of assets like home loans, she said.
Ekambaram said after demonetisation, there has been a large flow of savings into the formal economy, which needs to be routed to better-yielding investments through the savings account.
SBI had said that 60 per cent of the excess funds it received as deposits following demonetisation has gone out of the bank.
Ekambaram did not spell out anything on how long it will continue with the high offerings and said the bank has the choice to cut these rates whenever it wants.
Central law on cards to tackle chit fund schemes: Finance Minister Arun Jaitley
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The government is drafting a central law to protect people investing in chit fund schemes and will bring the legislation very soon to Parliament, Finance Minister Arun Jaitley said today.
Replying to a debate on 'The Banking Regulation (Amendment) Bill, 2017' in the Lok Sabha, he said there is a need for a pan-India law to deal with chit fund schemes in addition to state laws which already exist.
During the debate, opposition members had raised the issue of chit funds due to which investors have been duped and sought to know from the government what steps it was planning to take to deal with this malaise.
"SEBI is looking into the existing chit fund cases. There are state laws to deal with them in Bengal and Odisha. But what to do with those who run operations throughout the country? We are drafting a central law and very soon we will bring it before you," Jaitley said.
He said the chit fund schemes attract investors by offering a meagre 1-1.5 per cent interest rate higher than what is given by banks.
Jaitley had in the 2017-18 Budget announced that the government will amend the 'Multi-state cooperative Act' as there was an urgent need to protect the poor from dubious chit fund schemes, operated by unscrupulous entities.
Replying to the debate, the finance minister said the government has come out with safer options for investments and the Life Insurance Corporation has launched a pension scheme for senior citizens which offer a fixed 8.3 per cent interest rate on deposits.
Jaitley said the government has taken steps to offer stable interest rates to investors so that they are not lured into chit fund schemes.
He said at a time when inflation was running high at 10 per cent, bank deposit rates were high at 9 per cent. But loans were extended by banks at 14-15 per cent interest rate and with such high interest rates, global industrial investments will not come in.
"Slowly interest rates will become reasonable... Pension funds are safe investments," Jaitley said.
The government is drafting a central law to protect people investing in chit fund schemes and will bring the legislation very soon to Parliament, Finance Minister Arun Jaitley said today.
Replying to a debate on 'The Banking Regulation (Amendment) Bill, 2017' in the Lok Sabha, he said there is a need for a pan-India law to deal with chit fund schemes in addition to state laws which already exist.
During the debate, opposition members had raised the issue of chit funds due to which investors have been duped and sought to know from the government what steps it was planning to take to deal with this malaise.
"SEBI is looking into the existing chit fund cases. There are state laws to deal with them in Bengal and Odisha. But what to do with those who run operations throughout the country? We are drafting a central law and very soon we will bring it before you," Jaitley said.
He said the chit fund schemes attract investors by offering a meagre 1-1.5 per cent interest rate higher than what is given by banks.
Jaitley had in the 2017-18 Budget announced that the government will amend the 'Multi-state cooperative Act' as there was an urgent need to protect the poor from dubious chit fund schemes, operated by unscrupulous entities.
Replying to the debate, the finance minister said the government has come out with safer options for investments and the Life Insurance Corporation has launched a pension scheme for senior citizens which offer a fixed 8.3 per cent interest rate on deposits.
Jaitley said the government has taken steps to offer stable interest rates to investors so that they are not lured into chit fund schemes.
He said at a time when inflation was running high at 10 per cent, bank deposit rates were high at 9 per cent. But loans were extended by banks at 14-15 per cent interest rate and with such high interest rates, global industrial investments will not come in.
"Slowly interest rates will become reasonable... Pension funds are safe investments," Jaitley said.
Gold sales pick up in April-June, says World Gold Council
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Seasonal demand and improved rural sentiment, coupled with pre-GST sales, helped demand for gold in India increase by 37 percent in the April-June second quarter of 2017.
According to World Gold Council , demand for gold in India during the period was 167.4 tonnes, 37 percent higher than compared to the overall demand for same period a year ago. It was valued Rs 43,000 crore, 32 percent higher than the Rs 33,090 crore in the earlier period.
Jewellery demand was 41 percent higher at 126.7 tonne and was valued Rs 33,000 crore. The World Gold Council predicts demand for gold in India for the year at 650-750 tonnes.
"Though underlying concerns about GST and other transparency measures continue, predictably, positive sentiment returned with continued remonitisation and an expectation of monsoons. This was evident in the sales momentum during Akshaya Tritiya supported by a relatively higher numer of auspicious wedding days during the quarter", explained PR Somasundaram, India managing director, World Gold Council.
Towards the end of the quarter, one of the biggest demand drivers was the GST rate on gold, which spurred consumers and traders to advance their gold purchases ahead of the GST rollout , he said.
Seasonal demand and improved rural sentiment, coupled with pre-GST sales, helped demand for gold in India increase by 37 percent in the April-June second quarter of 2017.
According to World Gold Council , demand for gold in India during the period was 167.4 tonnes, 37 percent higher than compared to the overall demand for same period a year ago. It was valued Rs 43,000 crore, 32 percent higher than the Rs 33,090 crore in the earlier period.
Jewellery demand was 41 percent higher at 126.7 tonne and was valued Rs 33,000 crore. The World Gold Council predicts demand for gold in India for the year at 650-750 tonnes.
"Though underlying concerns about GST and other transparency measures continue, predictably, positive sentiment returned with continued remonitisation and an expectation of monsoons. This was evident in the sales momentum during Akshaya Tritiya supported by a relatively higher numer of auspicious wedding days during the quarter", explained PR Somasundaram, India managing director, World Gold Council.
Towards the end of the quarter, one of the biggest demand drivers was the GST rate on gold, which spurred consumers and traders to advance their gold purchases ahead of the GST rollout , he said.
RBI becomes first central bank in Asia to cut rates this year
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The Reserve Bank of India on Wednesday used the room provided by slumping inflation to cut its main policy rate - the first easing by an Asian central bank this year - but it kept the market guessing on whether there's more space for trimming.
The rate cut is the RBI's first since one of the same size in October and a show of confidence in a country that has experienced a surge in foreign investments into debt and shares this year.
Cutting the repo rate by 25 basis points to 6.00 percent - the lowest since November 2010 - had been widely anticipated as a slump in food prices sent June consumer inflation to a more than five-year low of 1.54 percent.
The RBI said reduced prices provided "some space" for monetary policy accommodation: inflation is now well below the RBI's 4 percent target and its projection of 2.0-3.5 per cent in April-September.
The rate cut will likely ease some of the pressure from the government and markets for action to lift the economy, which had annual growth in January-March of 6.1 percent - fast by global standards but India's lowest number in over two years.
Higher Inflation Ahead?
But the RBI also retained its "neutral" stance, and warned inflation could accelerate, while pinning future action on data - a view that leaves open the question of whether it will cut rates further, as sought by the government.
As a result, the RBI said it wanted more confidence that inflation would move "close to 4 percent on a durable basis".
The monetary policy committee "will continue monitoring movements in inflation to ascertain if recent soft readings are transient or if a more durable disinflation is underway," the RBI said.
The central bank stuck to its inflation projections, including that price increases could accelerate to 3.5 percent to 4.5 percent in October-December.
It attributed the prediction to factors such as planned pay hikes for government employees, a recovery in food prices, and the impact on prices from the July 1 launch of a national goods and services tax.
Radhika Rao, an economist at DBS said the decision lets the RBI "be non-committal on the future course of action, retaining the flexibility to react to the evolving inflation trajectory."
India's Economic Affairs Secretary Subhash Chandra Garg called the rate cut an "important step" to ensure sustained growth for stable, moderate inflation.
Nonetheless the RBI is likely to stay under pressure from those who feel its inflation projections are too high, and from government officials who believe efforts to curb food and energy prices will keep inflation low for some time.
Four members of the committee, including Governor Urjit Patel, voted to cut rates by 25 bps, while one voted for a 50 bps cut and one voted to leave rates unchanged.
The RBI's next policy meeting is on Oct. 3-4.
India Stands Alone
Still, in cutting rates, India's central bank stands out from other regional policymakers who are holding them steady in part to avoid volatility in foreign flows as the Federal Reserve weighs whether to raise U.S. rates for a third time this year.
The European Central Bank is also seen as potentially easing up on its bond purchases.
As such, the rate cut signals how India's standing with foreign investors has remained strong - and its confidence that it will remain so.
Inflows into debt and shares have reached $30.4 billion this year, including on hopes for an improving economy, economic reforms from the government and a low current account deficit.
The rupee on Wednesday surged to as much as 63.59 to the dollar, its highest since July 2015, although bonds were range-bound while the broader NSE share index ended down 0.3 percent.
The RBI on Wednesday also cut the reverse repo rate by 25 bps to 5.75 percent.
The Reserve Bank of India on Wednesday used the room provided by slumping inflation to cut its main policy rate - the first easing by an Asian central bank this year - but it kept the market guessing on whether there's more space for trimming.
The rate cut is the RBI's first since one of the same size in October and a show of confidence in a country that has experienced a surge in foreign investments into debt and shares this year.
Cutting the repo rate by 25 basis points to 6.00 percent - the lowest since November 2010 - had been widely anticipated as a slump in food prices sent June consumer inflation to a more than five-year low of 1.54 percent.
The RBI said reduced prices provided "some space" for monetary policy accommodation: inflation is now well below the RBI's 4 percent target and its projection of 2.0-3.5 per cent in April-September.
The rate cut will likely ease some of the pressure from the government and markets for action to lift the economy, which had annual growth in January-March of 6.1 percent - fast by global standards but India's lowest number in over two years.
Higher Inflation Ahead?
But the RBI also retained its "neutral" stance, and warned inflation could accelerate, while pinning future action on data - a view that leaves open the question of whether it will cut rates further, as sought by the government.
As a result, the RBI said it wanted more confidence that inflation would move "close to 4 percent on a durable basis".
The monetary policy committee "will continue monitoring movements in inflation to ascertain if recent soft readings are transient or if a more durable disinflation is underway," the RBI said.
The central bank stuck to its inflation projections, including that price increases could accelerate to 3.5 percent to 4.5 percent in October-December.
It attributed the prediction to factors such as planned pay hikes for government employees, a recovery in food prices, and the impact on prices from the July 1 launch of a national goods and services tax.
Radhika Rao, an economist at DBS said the decision lets the RBI "be non-committal on the future course of action, retaining the flexibility to react to the evolving inflation trajectory."
India's Economic Affairs Secretary Subhash Chandra Garg called the rate cut an "important step" to ensure sustained growth for stable, moderate inflation.
Nonetheless the RBI is likely to stay under pressure from those who feel its inflation projections are too high, and from government officials who believe efforts to curb food and energy prices will keep inflation low for some time.
Four members of the committee, including Governor Urjit Patel, voted to cut rates by 25 bps, while one voted for a 50 bps cut and one voted to leave rates unchanged.
The RBI's next policy meeting is on Oct. 3-4.
India Stands Alone
Still, in cutting rates, India's central bank stands out from other regional policymakers who are holding them steady in part to avoid volatility in foreign flows as the Federal Reserve weighs whether to raise U.S. rates for a third time this year.
The European Central Bank is also seen as potentially easing up on its bond purchases.
As such, the rate cut signals how India's standing with foreign investors has remained strong - and its confidence that it will remain so.
Inflows into debt and shares have reached $30.4 billion this year, including on hopes for an improving economy, economic reforms from the government and a low current account deficit.
The rupee on Wednesday surged to as much as 63.59 to the dollar, its highest since July 2015, although bonds were range-bound while the broader NSE share index ended down 0.3 percent.
The RBI on Wednesday also cut the reverse repo rate by 25 bps to 5.75 percent.
General Awareness
Reserve Bank announces its third bi-monthly policy review of current fiscal
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On August 2, 2017, Reserve Bank of India (RBI) announced Third Bi-Monthly Monetary Policy Statement for financial year 2017-18. This time, RBI has cut the policy repo rate by 25 basis points (bps) to 6 percent.
Post the Third Bi-Monthly Monetary Policy Statement announcement, the policy rates and reserve ratios are as follows:
Policy Repo Rate 6.00% Reduced by 25 basis points. Earlier it was 6.25% Reverse Repo Rate 5.75% Reduced by 25 basis points. Earlier it was 6.00% Marginal Standing Facility Rate 6.25% Reduced by 25 basis points. Earlier it was 6.50% Bank Rate 6.25% Reduced by 25 basis points. Earlier it was 6.50% Cash Reserve Ratio (CRR) 4.00% Unchanged – since 9th February 2013 Statutory Liquidity Ratio (SLR) 20.00% Unchanged – since 7th June 2017
Highlights of RBI’s Third Bi-Monthly Monetary Policy Statement:
RBI has reduced the policy repo rate by 25 basis points from 6.25 per cent to 6.0 per cent with immediate effect.
- Consequently, the Reverse Repo Rate stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25 per cent.
- As per text of the third bi-monthly policy statement, decision of Monetary Policy Committee (MPC) is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 per cent, while supporting growth.
- MPC has expressed concern that farm loan waivers by states may lead to fiscal slippages, undermine quality of public spending and may entail inflationary spillovers.
- Growth forecast for 2017-18 has been retained at the June 2017 projection of 7.3 per cent.
- It is to be noted that Chetan Ghate, Dr. Pami Dua, Dr. Viral V. Acharya and Dr. Urjit R. Patel were in favour of the monetary policy decision, while Dr. Ravindra H. Dholakia voted for a policy rate reduction of 50 basis points and Dr. Michael Debabrata Patra voted for status quo.
Next meeting of Monetary Policy Committee is scheduled on 3rd and 4th October 2017.
RBI constitutes internal group to improve MCLR
After announcing the third bi-monthly monetary policy review, RBI stated that it has constituted an internal study group to study the marginal cost of funds based lending rate (MCLR) to improve monetary policy transmission.
- This study group has been formed as the experience with the Marginal Cost of Funds Based Lending Rate (MCLR) system introduced in April 2016 for improving the monetary transmission has not been entirely satisfactory, even though it has been an advance over the base rate system.
- However, RBI did not elaborate on what exactly is the problem with the current MCLR regime.
- The study group will also explore linking the bank lending rates directly to market determined benchmarks and will submit its report by September 24, 2017.
Marginal Cost of Funds Based Lending Rate (MCLR):
- The new MCLR regime was implemented in the fiscal year starting April 2016.
- It applies to all new borrowers and is closely linked to bank deposits rates.
- All new floating rate loans are now linked to MCLR.
On August 2, 2017, Reserve Bank of India (RBI) announced Third Bi-Monthly Monetary Policy Statement for financial year 2017-18. This time, RBI has cut the policy repo rate by 25 basis points (bps) to 6 percent.
Post the Third Bi-Monthly Monetary Policy Statement announcement, the policy rates and reserve ratios are as follows:
| Policy Repo Rate | 6.00% | Reduced by 25 basis points. Earlier it was 6.25% |
| Reverse Repo Rate | 5.75% | Reduced by 25 basis points. Earlier it was 6.00% |
| Marginal Standing Facility Rate | 6.25% | Reduced by 25 basis points. Earlier it was 6.50% |
| Bank Rate | 6.25% | Reduced by 25 basis points. Earlier it was 6.50% |
| Cash Reserve Ratio (CRR) | 4.00% | Unchanged – since 9th February 2013 |
| Statutory Liquidity Ratio (SLR) | 20.00% | Unchanged – since 7th June 2017 |
Highlights of RBI’s Third Bi-Monthly Monetary Policy Statement:
RBI has reduced the policy repo rate by 25 basis points from 6.25 per cent to 6.0 per cent with immediate effect.
- Consequently, the Reverse Repo Rate stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25 per cent.
- As per text of the third bi-monthly policy statement, decision of Monetary Policy Committee (MPC) is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 per cent, while supporting growth.
- MPC has expressed concern that farm loan waivers by states may lead to fiscal slippages, undermine quality of public spending and may entail inflationary spillovers.
- Growth forecast for 2017-18 has been retained at the June 2017 projection of 7.3 per cent.
- It is to be noted that Chetan Ghate, Dr. Pami Dua, Dr. Viral V. Acharya and Dr. Urjit R. Patel were in favour of the monetary policy decision, while Dr. Ravindra H. Dholakia voted for a policy rate reduction of 50 basis points and Dr. Michael Debabrata Patra voted for status quo.
Next meeting of Monetary Policy Committee is scheduled on 3rd and 4th October 2017.
RBI constitutes internal group to improve MCLR
After announcing the third bi-monthly monetary policy review, RBI stated that it has constituted an internal study group to study the marginal cost of funds based lending rate (MCLR) to improve monetary policy transmission.
- This study group has been formed as the experience with the Marginal Cost of Funds Based Lending Rate (MCLR) system introduced in April 2016 for improving the monetary transmission has not been entirely satisfactory, even though it has been an advance over the base rate system.
- However, RBI did not elaborate on what exactly is the problem with the current MCLR regime.
- The study group will also explore linking the bank lending rates directly to market determined benchmarks and will submit its report by September 24, 2017.
Marginal Cost of Funds Based Lending Rate (MCLR):
- The new MCLR regime was implemented in the fiscal year starting April 2016.
- It applies to all new borrowers and is closely linked to bank deposits rates.
- All new floating rate loans are now linked to MCLR.
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