1. GOVERNMENT APPOINTS MONETARY POLICY COMMITTEE TO HELP RBI SET INTEREST RATES: The government appointed three members in the Monetary Policy Committee (MPC), putting the seal on India’s new architecture for setting interest rates and ending the Reserve Bank of India governor’s role as sole arbitrator. The three members will be joined by three Reserve Bank members, with Governor of RBI having a casting vote. Its first policy review is slated to be held on October 4 th .
2. CABINET CLEARS MERGER OF RAILWAYS AND UNION BUDGETS: In a sweeping change of India’s annual budget process, the government ended the 92 years old practice of having a separate rail budget. The union cabinet has decided that from the coming year the rail budget and the general budget will be amalgamated. The Union cabinet also approved the finance ministry’s proposal to advance the general budget’s presentation by a month.
3. INDIA LESS PRONE TO BANKING CRISIS RISKS: According to Bank for International Settlements (BIS) India is less vulnerable to banking distress among the major economies while neighbouring China faces higher risks. As per data compiled by BIS of more than 40 economies show that credit-to- GDP gap was among the least for India.
4. SEBI WANTS RATING AGENCIES TO MAKE FULL DISCLOSURE: SEBI is asking credit rating agencies to come out with a slew of disclosures while doing corporate ratings and fix accountability in view of the recent surge in corporate indebtedness. Now the rating agency will have to spell out how the rating is conducted, responsibilities of the analysts, and evaluate the performance of their respective rating committees, particularly if there is an unforeseen default.
5. RBI PLANS FUND TO PUSH CARD SWIPE MACHINES: Reserve Bank of India is planning to create a fund to push card swiping machines. Concerned over low use of debit cards in electronic payments, the RBI wants banks those who are not installing card accepting machines to contribute to this fund that will subsidise installation of point of sales (PoS) terminals. There are 68 crores debit cards in India. But the number of PoS machines is only 14 lakh. The average debit card use at PoS machines is one transaction for every 10 transactions in an ATM.
6. RBI SAYS BANKS MUST REPORT ALL CYBER CRIMES: The Reserve Bank of India has issued an ultimatum to Indian banks on cyber crimes, asking them to immediately report any breach of security so that the overall network is not compromised. Some banks are reluctant to report such frauds in order to avoid negative publicity. RBI has set an deadline of March 31 st 2017, for banks to put in place a mechanism to report cyber-crimes immediately.