Banks exposure to the commodity sector has come under the Reserve Bank of India (RBI) glare.

Commodity sector under RBI's lens

Business Standard

&nbsp;Time period for repatriation of export proceeds increased to a year. 
&nbsp;The credit policy offers exporters greater flexibility in realising and repatriating their export proceeds and addresses some of their long-standing demands.

Life will be easier for exporters now

O P Bhatt Chairman, State Bank of India 
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BS JURY

&nbsp;Refiners can hedge up to 50 per cent of imports. 
&nbsp;The RBI has permitted domestic crude oil refining companies to hedge their commodity price risk on domestic purchase of crude oil and sale of petroleum products on the basis of underlying contracts, which are linked to international prices on overseas commodity exchanges/markets.

Hedging easier for oil companies

&nbsp;Infrastructure companies can now hope to borrow more from commercial banks. 
&nbsp;Taking note of the usual delays an infrastructure project is exposed to, the RBI has relaxed the norm for classifying an infrastructure project as a sub-standard asset by banks to two years from date of completion, from one year earlier.

Easier norms for loans taken for projects

&nbsp;Fresh norms may be introduced for derivatives exposures of banks. 
&nbsp;Reserve Bank of India, in its annual policy for 2008-09, has said that it will review the existing guidelines for banks' off-balance-sheet exposures such as derivative products.

Exposure norms for off-balance sheets of banks under review

Rashesh Shah, Chairman, Edelweiss Group 
In its annual policy announcement, the RBI has hiked the CRR by 25bps and has left other policy rates unchanged.

Good policy, but uncertainty to continue

With banks increasing exposure to systemically important Non Banking Finance Companies (NBFCs), the RBI proposes to review the prudential regulations for the latter.

NBFCs under RBI`s lens

Reserve Bank of India (RBI) will realign its internal supervisory process by end August, 2008 to enhance the effectiveness of consolidated monitoring of financial conglomerates.

Supervision of financial conglomerates on the cards

Banks, brokers could be first off the block; companies need to have underlying rupee-dollar positions.

Currency futures to make debut soon

Nilesh Shah, Deputy MD, ICICI Prudential AMC 
With a CRR hike of 25 bps, RBI has clearly sent signals that current focus is to control inflation by managing liquidity rather than increasing rates which could be more detrimental to growth? 
With inflation levels surpassing target limits, its impact on the individual consumers and the economy as a whole could not be ignored.

Credit growth may slow down further

&nbsp;Move should result in more takers for gilts. 
&nbsp;To make the government borrowing porgramme attractive in times of rising interest rates, the Reserve Bank of India (RBI) has mooted the introduction of floating rate bonds (FRBs).

Floating rate bonds in the works

After the flawed launch of interest rate futures in June 2003, the RBI has once again decided to re- introduce the product.

Interest rate futures to be re-launched

Neeraj Swaroop, CEO, Standard Chartered Bank 
The Reserve Bank of India's policy is supportive of growth and has been very well received by industry and financial markets.

CRR to be used more and more

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Policy targets inflation without hurting growth

P>The annual announcement of monetary and credit policy by the Reserve Bank of India (RBI) has come amidst a rather complicated macro-economic situation.

Editorial: Balancing act

Liquidity: Becoming scarce 
The first tranche of CRR hike by 25 basis point and a further rise in CRR by 25 basis points in the annual policy announcement of RBI on Tuesday led to a tightening of the liquidity situation.

Funds strained after CRR hike

P>Once you take into account the forex needs for four months of imports, NRI deposits, short term debt and FII flows, India's forex reserves of $300 billion don't look so large.

Madan Sabnavis: Take a closer look at external debt

Liquidity: Shining bright While the rupee liquidity improved, dollar shortage continued to show up. According to dealers, banks have already met their fund requirements to pay the advance

Gilt prices head south

Liquidity: Beaming look The liquidity has improved in the system as a result of government expenditure and there was no fund infusion by the Reserve Bank of India.

Dollar sales slow down amid global turmoil

Liquidity: Good going The liquidity remained comfortable in the system. The Reserve Bank of India did not infuse any additional funds. But it absorbed around Rs 5500 crore from the system

Re ends flat, call ranged

Financial Analysis: Find the Latest Financial News Analysis & Research Updates from all top sources for the Indian Finance industry on Business Standard.

Finance News Analysis, Financial Analysis and Research | Business Standard

Find the Latest Financial News Analysis & Research Updates from all top sources for the Indian Finance industry on Business Standard.

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