Reserve Bank of India

Purpose -The purposes in this paper are: engaging in a critical examination of the framework of the banking regulatory framework in India; assessing the operational efficacy of banking regulatory and supervisory mechanisms; and providing an in-depth legal analysis of the role of the Reserve Bank of India (RBI) as the country's central bank and the principal supervisory authority. Design/methodology/approach -The method used is legal examination of regulatory practice and case-study based analysis. It relies factually on official publications in the public domain, academic writings and newspaper reports to assess the impact of the fraud and explore the legal, regulatory and financial implications of the supervisory lapses. Findings -The findings in the paper relate to the impact and extent of he Ketan Parekh fraud and the nature and scope of critical central banking supervision lapses. The paper concludes that such lapses can induce systemic problems in a key emerging economy like India especially when it is rapidly entering the second phase of major banking and financial reforms. Research limitations/implications -Various investigations are still underway as regards the Ketan Parekh fraud and several cases are being heard in courts and tribunals. The full extent of legal and regulatory liability is yet to be fully ascertained. Originality/value -It is of immense significance to bankers, lawyers, auditors, consultants, researchers, jurists, law enforcement officials and those involved in financial and banking regulation.

This paper mainly analyses the early phase of Banking in India upto 1947. The phase leading up to independence laid the foundation of the Indian banking system. The initial phase (up to 1947) was a difficult period for the banking sector. In Preindependence period most banks were small and had private shareholding, they were largely localised and many of them failed. They came under the purview of the Reserve Bank that was established as a central bank for the country in 1935. In this phase, many banks failed which was marked by the two World Wars and the Great Depression. By the end of this phase, the country's financial requirements were still catered to, in a large measure, by the unorganised sector. The focus of the banking sector was on urban areas and the requirements of agriculture and the rural sector were neglected. Although the co-operative credit movement had a very encouraging beginning, it did not spread as expected despite Government patronage.

Credit control is a very important function of RBI as the Central Bank of India. For smooth functioning of the economy RBI control credit through quantitative and qualitative methods. Thus, the RBI exercise control over the credit granted by the commercial bank.

The Banking Regulation Act, 1949 vests the Reserve Bank with various statutory powers of control and supervision over co-operative banks. The powers in regard to incorporation, management, etc., of these banks, however continue to vest in the Registrars of co-operative Societies of the States concerned. Further, the provisions of the Banking Regulation Act, 1949 (as applicable to Co-operative Societies) shall be in addition to, and not, save as expressly provided in the Act, in derogation of any other law for the time being in force. This means that the co-operative Banks are required not only to comply with the provisions of the Banking Regulation Act, but also other laws applicable to them. In respect of matters specifically provided in the Banking Regulation Act, the provisions of the said Act will prevail over the provisions of the Co-operative Societies Act. In 1966, the Act was made applicable to cooperative banks by incorporating Section 56 therein.

In this paper, we situate farmer suicides in the larger context
of the agrarian crisis in India, based on our fieldwork
in Maharashtra and Punjab. In the first section, we outline
the overall context of India’s agriculture, as ascertained from
various government reports and surveys. In the subsequent
sections, we present observations from the fieldwork conducted
in Yavatmal district of Maharashtra, and Sangrur district of
Punjab, and analyse the preconceived dissimilarities and
observed similarities in these two apparently diverse zones.

Drawing connections between farmer suicides, landholding
patterns and outstanding debt, our narrative approach emphasises
the kinship dimension of indebtedness, which creates a
greater social and moral obligation to repay loans that are
borrowed from relatives. While highlighting the shame of
indebtedness, we argue that there are multiple factors that
conjointly account for such tragedies, including faulty cropping
patterns, rising input costs, nature of borrowings and
informal sources of credit, as well as the aspirational consumption​
of farmers who often borrow money for non-agricultural purposes.
As formal credit sources are not equal to the task of
serving farmers, a large number of individuals who were not
traditionally associated with lending have entered the moneylending
business.

The concluding section recommends reformative measures
to encourage an integrated policy framework on agrarian matters,
particularly cropping patterns and institutional credit
disbursal systems.

Regional Rural Banks are established under the provisions of an ordinance promulgated on the 26 th September, 1975 and the RRB Act, 1976 with an objective to ensure sufficient institutional credit for agriculture and other rural sectors. Reforms and mergers introduced by the Government of India in consultation with Reserve Bank of India (RBI) and National Bank for Agriculture and Rural Development (NABARD) in the years 1994-95 to 2005-06 have yielded positive results in respect of key performance indicators such as number of banks and branches, capital composition, deposits, loans, loans and the trend of investments. The objective of this paper is to investigate whether the merger/amalgamation of Regional Rural Banks in India, undertaken in 2005-06 has helped improve their performance. Several committees have emphasized the need to improve the performance of these banks which play an important role in the rural credit market in India. The study is diagnostic and exploratory in nature and makes use of secondary data. The study finds and concludes that performance of rural banks in India has significantly improved after amalgamation process which has been initiated by the Government of India.

The monetary rate announcement is one of the important event which bothers bond investors. demonetization announcement. The effect of demonetization announcement on Indian bond indices was severe while comparing with other monetary policy announcements. The study also indicated that the level of impact of monetary policy announcements on Indian bond indices got increased during the post demonetization period. NIFTY 15 year and above G-Sec is the Indian bond index which reacted more towards the monetary policy and demonetization announcements. Finally, Indian bond market indices shows a tendency to diverge one from another after the events happens.

The COVID-19 pandemic could be one of the most serious challenges faced by the financial services industry in nearly a century. The COVID-19 impact on banking will be severe fall in demand, lower incomes, and production shutdowns and will adversely affect the business of banks. The situation is exacerbated by staff shortages, inadequate digital maturity, and pressure on the existing infrastructure as firms scramble to deal with the impact of COVID-19 on financial services. Banks certainly have their hands full in light of the novel coronavirus outbreak COVID-19. Borrowers and businesses face job losses, slowed sales, and declining profits as the virus continues to spread around the world. Banking customers are likely to start seeking financial relief. An obvious way that pandemics can impact financial systems is through their enormous economic costs. To managing the direct economic impact of the coronavirus, banks need to have a plan in place to protect employees and customers from its spread. Many banks are already starting to encourage remote working of some employees. In this paper, we are aimed to demonstrate an impact of pandemic covid-19 on the banking and financial sector. India’s coronavirus outbreak threatens a years-long clean up of its financial system, according to the Indian bank. Banks sit at the heart of the economy and provide funding to corporate and individuals. Their stability is crucial to keep the system up and running.

Reserve Bank of India has fixed some targets and sub targets for all commercial banks for PSL (Priority Sector Lending). Priority sector lending refers to that sector of economy which is not getting adequate financial assistance from different financial institutions. Due to Priority sector Lending, Non-performing assets of the banks are increasing day by day. This research paper is an attempt to measure the two way effect of every sector of PSL on NPA for public and private banks. Effect between PSL and NPA is found with the help of E Views Software. The period of study is 2001 to 2013. For the analysis Pooled Regression Model, Panel Regression Model and Two Way Fixed Effect Model is used.

In this paper we analyze whether the current macroeconomic environment in India is suitable for implementation of inflation targeting as a monetary policy strategy, in light of the recommendation of the Urjit Patel Committee Report. Our results indicate that historically the Reserve Bank of India has given more importance to inflation compared to output growth and exchange rate changes in its monetary policy conduct and that in recent times there has been an increased emphasis on monetary independence thereby comfortably placing the RBI on a path to move towards inflation targeting. However we also find factors, that are traditionally outside the control of monetary policy, do exert a strong impact on aggregate prices in India thereby making the choice of nominal anchor a tricky one. Furthermore, the success of monetary policy in containing inflation is found to be crucially contingent on an appropriate fiscal policy as well.

Using sectoral T-accounts, this paper analyzes the implications of bank bail-outs and bank bail-ins. Contrary to popular opinion, bank bail-outs do not utilize taxpayers' money. Moreover, bank bail-outs funded through recapitalization bonds or deficit financing and bail-ins have similar net effects on sectoral balance sheets. There are, however, questions of moral hazard and normative issues of fairness that must not be ignored.

Management and quantification of operational risk has been impeded by the lack of internal or external data on operational losses. We consider newly available data collected from public information sources, and show how such data can be used to quantify operational risk for large internationally active banks. We find that operational losses are an important source of risk for such banks, and that the capital charge for operational risk will often exceed the charge for market risk. Although operational risk capital will vary depending on the size and scope of a bank's activities, our results are consistent with the 2-7 billion dollars in capital some large internationally active banks are currently allocating for operational risk.

Public Account funds being managed by the Government is a perpetual source of distortion in our public finances. It is time to separate all Public Account funds from the cash balances of the Government and entrust their management to professional trusts free from Government control. Apart from making these funds self-sustaining, this will also enforce much greater discipline in the management of fiscal deficits and public debt.

India is the second most populous country after China and one of the fastest growing economies of the world. The present population of India is more than 600 million; however the population assessing banking services is merely 200 million only. Studies found that among 55 countries India stands 29th in FINANCIAL INCLUSION INDEX. Reports also stated that 45.9 million farmer households do not have access to credit either from an institutional or non institutional source. The report also stressed on poverty as one of the major cause of exclusion. Researchers have argued that financial inclusion has a positive impact on various socio economic indicators. It has a positive impact on the growth and development of a country. A higher level of financial inclusion indicates a high level of employment and low level of poverty. Besides, it also leads towards reducing the inequalities among the population. It allows the poor to access credit without having collateral and credit history etc. There are substantial literatures which endorses the positive impact of financial inclusion on the lives of the population. The objective of the study is to explore the status of financial inclusion of India vis-à-vis Assam and the North Eastern Region of India. The study is descriptive in nature.

The Central Data Base Management System (CDBMS), the corporate data warehouse has been operational for internal
users within Reserve Bank of India, for the last one and half years. Presently it covers data series relating to four subject
areas viz. Macro Economic Aggregates, Financial Market Analysis, Financial Sector Stability Analysis, and Macro Monetary
Management. These data have been collected from various Departments of RBI as well as from Government Statistical
agencies. In November 2003, Bank management decided that as much of the data in CDBMS as possible should also be
made available to researchers and analysts outside the Bank through Internet deployment of CDBMS, to be called
CDBMSi, in parallel with promoting internal usage. The Bank constituted an expert group in January 2004 for an
independent expert review to advice on the scope, content and detail of the data elements that can be placed in the public
domain. The Expert Group met three times since its formation. Group members reviewed the details regarding the items of
data currently incorporated in the system, their content, frequency, level of dis-aggregation and periods covered. The basis
for determining the items to be made accessible to outsiders was also extensively discussed.
The Group feels that building CDBMS in itself is an impressive and commendable achievement. However, the system is still
evolving and teething problems are inevitable. The Group has noted the issues raised by users regarding the shortcomings
of current implementation of CDBMS. It is difficult to judge whether these are an adequate explanation for the slow pick-up
in the internal usage of the system. Perhaps one has also to look at the extent to which higher levels of the Bank’s
management demand databased analyses and the extent to which heads of Departments and Divisions stimulate and lead
this effort. Nevertheless study of the current data coverage and the way data are presented in the system also corroborate
that some of these problems do exist and need to be addressed.
The Group found the coverage of subjects of interest to in-house users, for which RBI is the primary source, to be quite
comprehensive. Coverage of some important segments of the financial sector on which RBI does not directly collect much
data, will require inputs from other institutions like NABARD, IDBI, SEBI and the stock exchanges. Data compiled and
digitized by non-governmental organizations (like, the EPW Research Foundation, CMIE, ICRISAT), after due scrutiny and
review, may be incorporated in the CDBMS.
The usefulness of data series provided will be limited unless the sources of data, concepts, coverage and methodology of
estimation and changes therein are properly documented. That this has not been done systematically for all data sets is a
major lacuna in the CDBMS as it now stands. Revisions in estimates as well as changes in scope and classifications are
not always promptly reported to CDBMS. This gives rise to apparent inconsistencies between data in the CDBMS and other
sources. Where secondary sources are used, authentication is far more difficult.
The Group has reviewed current data dissemination practice of the Bank. It is observed that the main channels of
dissemination are publications - periodical and ad hoc, press releases, Governor's bi-annual announcements of monetary
and credit policies, speeches, reports, circulars, manuals and the Bank's public website (www.rbi.org.in). Most of the
information so disseminated consisted of processed data. Access to primary data was restricted to ‘authorized’ users within
the organization.
The Group feels that in order to be useful it is essential to ensure that the data are validated by source agencies and
promptly updated; inform users about the scope, concepts and methodology of the sources of information posted in the
system; and indicate the extent of comparability of data in the above respect for any given subject area across regions and
over time and changes that may have occurred in these respects. In CDBMSi it would be useful to classify the information
into data sets based on frequency of observation (like monthly, quarterly, etc.), and functional categories (like money
supply, state budgets, etc.).
The Group strongly recommends that the task of incorporating the detailed metadata, particularly conceptual underpinning
and compilation methodology of different data series, be given high priority by RBI management and RBI should back it with
adequate funds and staff. Data in CDBMSi should be made available in tabular form and it should also be capable of being
downloaded in Excel and pdf format.
It is understood that the RBI has taken an internal decision that the Departments of RBI that are forwarding data to CDBMS
would be treated as owner of data and the departmental in-charge would frame the access policy with respect to data
provided by that Department of RBI. However, a review of the Departments’ negative list suggests that they would like to
limit the data to be made available to the public through CDBMSi only to those data which are already being published by
RBI. This falls far short of the stated government policy of freedom of information and transparency. Enlarging the scope
and detail of information on the operations of the financial and real sectors in the public domain enables outside experts to
undertake analyses of trends and policy issues of wider scope and provides independent assessments on various issues of
interest to policy makers in the Bank and the government than is possible with in-house expertise.
The negative list must, in Group’s view, be limited to items of information that (a) are collected on the assurance that
informants’ identity and information relating to them will be kept confidential; and (b) give information advantage to the RBI
as regulator. Confidentiality can be taken care of in three ways 1) Aggregation/consolidation 2) Masking the identity of
units and 3) Releasing data after a time gap. It appears that the Departments have not identified any threshold time beyond
which a data element would loose its sensitivity and can be made available to public. The Expert Group is of the opinion
that unless data are obtained with explicit commitment to maintaining its confidentiality, it should be fit for publication if it
does not directly impact the functioning and performance of market players. Even in the later case, after a hiatus of
reasonable time such data should be fit for publication. Further, information that cannot be disseminated on considerations
of sensitivity and secrecy should not be perpetually buried in official files. A system should be established whereby
essential information is distilled, analyzed and put out in the form of periodic studies.
The Expert Group is of the opinion that the Departments’/Divisions’ lack of confidence on the quality of the data should not
be the grounds for it being placed in the negative list. Provided that data quality disclaimers are given, and provided that
appropriate qualifications are given in the data definitions, there is no harm in providing it for the public. The first page of the
website therefore should contain a strong qualifier that the data are only indicative and may be changed/corrected in the
future.
The following measures are suggested to strengthen the CDBMS. Technological infrastructure has been provided by the
CDBMS but the harder part of making available annotated detailed and long time series data are yet to be accomplished. It
needs to be ensured that the series included in the CDBMS are crosschecked for consistency with the data published by
the original source; revisions made by the source agency are promptly incorporated; and current data compiled by various
Departments/ affiliates of the RBI are promptly and automatically reported and incorporated in the CDBMS data repository.
The data producing Departments need to be sensitized about releasing the data as soon as it is ready, including any
revisions thereof. If the data producing entities disseminate the data through multiple channels, then it might be difficult to
keep data integrity. In this connection there is a need to focus on Weekly Statistical Supplement and the RBI Bulletin.
Producers of the data should be responsible for data integrity and synchronization of data flow to CDBMS with other modes
of release of data by the Bank and other agencies outside RBI. The main point that the group would like to strongly
underscore on this issue is that the objective of building such a massive database with required annotations involves a
gigantic task and cannot be undertaken by one small single unit. It must be undertaken jointly by all relevant
Departments/Units within the RBI.
The staff strength and budgetary allocation for the CDBMS unit and related activities have to be increased in a measure
commensurate with the task it is expected to perform. It is also important to institutionalize mechanisms to ensure greater
interaction and collaboration among CDBMS as well as the sources and users of the system. Further, to strengthen this
process, as well as to bring outside researchers' perspective regarding data content and format of CDBMSi on an ongoing
basis, the RBI may consider formation of a Standing Advisory Group including outside experts.

Linearized New Keynesian models and empirical no-arbitrage macro-finance models offer little insight regarding the implications of changes in bond term premiums for economic activity. We investigate these implications using both a structural model and a reduced-form framework. We show that there is no structural relationship running from the term premium to economic activity, but a reduced-form empirical analysis does suggest that a decline in the term premium has typically been associated with stimulus to real economic activity, which contradicts earlier results in the literature. * The views expressed in this paper are those of the authors and do not necessarily reflect the views of other individuals within the Federal Reserve System. We thank John Cochrane, Monika Piazzesi, and Jessica Wachter for helpful comments and suggestions. Michael McMorrow, Vuong Nguyen, and David Thipphavong provided excellent research assistance. † Federal Reserve Bank of San Francisco; http://www.frbsf.org/economists/grudebusch; Glenn.Rudebusch @sf.frb.org. ‡ Macroeconomic Advisers, LLC; http://www.macroadvisers.com; sack@macroadvisers.com. § Federal Reserve Bank of San Francisco; http://www.ericswanson.pro; eric.swanson@sf.frb.org.

Indian banking sector is an important constituent of the
Indian financial system. The banking sector plays a vital
role through promoting business in urban as well as in
rural areas in recent years. It helps to develop economy of
the country. Rural financial market development is a
complex process and examined through various
committees. Priority Sector Lending, Lead Bank Scheme,
Service Area Approach etc. are some outcomes of the
repeated scrutiny of the system. India is primarily an
agriculture based country. Agriculture contributes nearly
one fifth of the gross domestic product in India. Therefore,
it is always said that rural development can‟t be completed
without agricultural development. Hence, this researches
paper emphasis an agriculture credit and credit plan
prepared for priority sector lending.

We use a Markov switching model to estimate a time-varying Taylor-type rule for Indian monetary policy conduct. This empirical approach is consistent with statements of Indian monetary policy decision-makers. We find that the conduct of monetary policy over approximately the last two decades can be characterized by two regimes, which we term 'hawk' and 'dove.' In the first of these, policy making reveals a greater relative weight on checking inflation vis-à-vis narrowing the output gap.

Banking sector is one of the important sectors, which plays a significant role in the economic development of a country. It advances loans to various sectors viz. agriculture, industrial, infrastructure, and so forth and thereby accelerates the cycle of economic growth in the country. Hence, it is very imperative that the credit supply should be smooth in an economy to run the business cycle of various entities efficiently. However, in recent years it has been seen that banks become cautious in advancing loans. The reason is massive amount of Non-Performing Assets (NPAs) which affects banking operations severely. NPAs are those assets on which banks do not receive interest income. The present study discusses the concept of NPAs, its types, asset classification, and provisioning norms as per Reserve Bank of India (RBI) guidelines. The study further analyses the empirical position of NPAs in Indian Scheduled Commercial Banks (SCBs) and suggests measures for reducing them.

The Reserve Bank of India (RBI) was one of the few major central banks that emerged unscathed from the GFC. It deployed macro-prudential tools to target asset bubbles, while Western central bankers were ignoring the problem. Since the crisis, it has It has stuck to monetary rectitude despite constant criticism that it was ‘behind the curve’, even as central banks in advanced economies flogged monetary policy to its limits and fuelled new asset bubbles. It has held the view that India’s growth crisis is at its root structural and cannot be fixed by monetary policy. The rationale of current attempts to reconfigure the policy formulation processes of one of the few institutions in India that works well seems baffling as it violates the golden rule that if it ain’t broke, don’t fix it.

Management and quantification of operational risk has been impeded by the lack of internal or external data on operational losses. We consider newly available data collected from public information sources, and show how such data can be used to quantify operational risk for large internationally active banks. We find that operational losses are an important source of risk for such banks, and that the capital charge for operational risk will often exceed the charge for market risk. Although operational risk capital will vary depending on the size and scope of a bank's activities, our results are consistent with the 2-7 billion dollars in capital some large internationally active banks are currently allocating for operational risk.

We explore the effects of mandatory third-party review of mortgage contracts on the terms, availability, and performance of mortgage credit. Our study is based on a legislative experiment in which the State of Illinois required “high-risk” mortgage applicants acquiring or refinancing properties in 10 specific zip codes to submit loan offers from state-licensed lenders to review by HUD-certified financial counselors.

India is the second most populous country after China and one of the fastest growing economies of the world. The present population of India is more than 600 million; however the population assessing banking services is merely 200 million only. Studies found that among 55 countries India stands 29th in FINANCIAL INCLUSION INDEX. Reports also stated that 45.9 million farmer households do not have access to credit either from an institutional or non institutional source. The report also stressed on poverty as one of the major cause of exclusion. Researchers have argued that financial inclusion has a positive impact on various socio economic indicators. It has a positive impact on the growth and development of a country. A higher level of financial inclusion indicates a high level of employment and low level of poverty. Besides, it also leads towards reducing the inequalities among the population. It allows the poor to access credit without having collateral and credit history etc. There are substantial literatures which endorses the positive impact of financial inclusion on the lives of the population. The objective of the study is to explore the status of financial inclusion of India vis-à-vis Assam and the North Eastern Region of India. The study is descriptive in nature.

Indian banking sector is an important constituent of the Indian financial system. Banking in India has a very old origin. It started in the Vedic period where literature shows the giving of loans to others on interest. India has over the last decades experienced different degree of responsive policies in the banking sector. The banking sector plays a vital role through promoting business in urban as well as in rural areas in recent years. It helps to develop economy of the country. It is always said that rural development cannot be possible without supplying adequate credit to the priority sector in general and agricultural in particular in time. Hence, this researches paper especially emphasis on priority sector lending in the Ahmednagar district.

this article, Lori Taylor describes the three rationales, discusses the economic evidence in their support, and examines their major implications for the role of government in primary and secondary education. She concludes that there is a significant public interest in education. However, the government's role is clearly a subordinate one; families should remain the primary educational decision makers --- and the primary educational financiers. Finally, her analysis of the economic evidence suggests that while government has an interest in ensuring that schools produce desirable social outcomes, it does not necessarily have a role in providing educational services or in regulating the way in which private schools provide such services. The European System of Central Banks Mark A. Wynne Page 2 On January 1, 1999, the European System of Central Banks (ESCB) began conducting monetary policy for eleven of the fifteen nations of the European Union, formally creating an economic and m...

The authors attempt to construct a monetary conditions index (MCI) for India in order to take both interest rate and exchange rate channels simultaneously into consideration while evaluating the stance of monetary policy and evolving monetary conditions. The paper also constructs a "broad" MCI which incorporates credit growth as an additional indicator of monetary conditions. Since the index is constructed using differences between actual and an “arbitrarily†chosen base period, the index only represents a relative degree of change and not an absolute measure. No significance is usually attached to the level of the index and it should not be interpreted too mechanistically. [RBI Occassional Papers, Winter 2006].

I modify the uniform-price auction rules in allowing the seller to ration bidders. This allows me to provide a strategic foundation for underpricing when the seller has an interest in ownership dispersion. Moreover, many of the so-called "collusive-seeming" equilibria disappear.

The awards are based on improvements in the overall performance of the Bank and rely predominantly on data provided by the RBI.  The key criteria have been quantitative performance measures.  In addition, a survey of senior bank employees has also undertaken that revealed the qualitative performance of the CEO.  The details of the methodology are provided below.