GJ Town India

Challenges yet to inflation and inflationary outlook Dr. Sunil Sinha, Principal Economist, India Ratings and Research (Fitch Group) expressed view on  RBI's Fifth Bi-monthly Monetary Policy Statement 2018-19 says, as expected RBI kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5%. Although RBI has lowered its CPI inflation projection to 2.7%-3.2% in H2:2018-19 and 3.8%-4.2% in H1:2019-20 as against its earlier projection of 3.9%-4.5% in H2:2018-19 and 4.8% in Q1:2019-20, it still believes that there are challenges to inflation and inflationary outlook.   These could emanate from (i) volatility and sudden spike in prices of perishable food items, (ii) risk from revision in minimum support prices (MSPs) which has yet not played out fully, (iii) crude oil prices due to geo-political tensions/decision of OPEC to cut production, (iv) volatility in global financial market, (v) fiscal slippages and (vi) staggered impact of HRA rev

Liquidity Risk Monitoring Tools and Liquidity Coverage Ratio (LCR), Disclosure Standards! Presently, the assets allowed as the Level 1 High Quality Liquid Assets (HQLAs) for the purpose of computing the LCR of banks, inter alia, include (a) Government securities in excess of the minimum SLR requirement and, (b) within the mandatory SLR requirement, (i) Government securities to the extent allowed by RBI under Marginal Standing Facility (MSF) [presently 2 per cent of the bank's NDTL] and (ii) under Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) [presently 11 per cent of the bank's NDTL]. It has been decided to permit banks with effect from October 1, 2018, to reckon Government securities held by them up to another 2 per cent of their NDTL, under FALLCR within the mandatory SLR requirement, as Level 1 HQLA for the purpose of computing their LCR.  Hence, the carve-out from SLR, under FALLCR will now be 13 per cent, taking the total carve out