Home Business RBI Working W...

RBI Working With Regulators For Better Security Lending Products, Says DG

The Reserve Bank of India (RBI) is currently working with other financial sector regulators like Sebi, PFRDA and Irda to develop an interest rate market

0
RBI, security, finance, market
This is broken as Rs 1,23,414 crore as surplus for year 2018-19 and another Rs 52,637 crore of excess provisions identified by the committee as per the revised Economic Capital Framework. Pixabay

The Reserve Bank of India (RBI) is currently working with other financial sector regulators like Sebi, PFRDA and Irda to develop an interest rate market where mutual funds, pension and insurance funds could participate in securities lending to deepen market based finance and develop an alternate to bank finance.

“IRDA, SEBI and PFRDA too could help development of interest rate markets. For instance, short selling activity could benefit if a wider pool of securities lenders can be developed.

“Insurance and pension funds, mutual funds have significant holdings of Government securities that could be used to lent to short sellers. This would avoid short-squeeze incident we saw a couple of years back, apart from generating income for these entities.

“We are working with regulators to develop a securities lending product that could enable these entities to participate in securities lending,” B.P. Kanungo, Deputy Governor, Reserve Bank of India recently said at FIMMDA meeting in Moscow.

RBI, finance, security, market
Reserve Bank of India’s regional office at South Gandhi Maidan Marg, Patna. Wikimedia Commons

FIMMDA is a representative body of participants in the fixed income market in India.

He said the Indian financial sector which mostly has been a bank-based one needs to develop a robust fixed income market to bring in market discipline, to augment bank finance and indeed free up bank finance for uses that cannot access the market directly.

Development of the fixed income market has been an important objective of the Reserve Bank, the Government, the SEBI and other regulators these many years. Significant progress has been made, yet a lot remains to be achieved.

The Banking regulator is also currently looking at refurbishing some regulations on treatment of cash margins as deposits, payment of interest on such margins, posting of collateral abroad to enable participants to move to global margining standards.

“The risk management at market level is pretty robust, with central counterparty settlement, exchange traded products, trade repositories, legal entity identifier.

ALSO READ: WHO Urges South-East Asian Countries to Accelerate Efforts to Eliminate Cervical Cancer by 2030

But there is scope of improvement at entity-level as far as financial institutions are concerned, which will be tested with introduction of new accounting standards. Some other aspects of regulation – treatment of cash margins as deposits, payment of interest on such margins, posting of collateral abroad – are all under examination to enable participants to move to global margining standards.

Kanungo further said in the next five years the demand for bonds will significantly outstrip the supply.

“It is estimated that five years down the line, the demand for bonds will significantly outstrip the supply,” he said. (IANS)

Next Story

The USD/INR Outlook – Is the Indian Rupee in Decline?

Due to the Coronavirus pandemic Indian economy is expected to contract by 5% in the financial year 2021

0
rupeerupee Indian
Indian Rupee has fluctuated wildly during the last couple of weeks mainly bacuse of the pandemic. Pixabay

Not all nations have handled the coronavirus outbreak with the same measure of efficiency, with India’s chaotic lockdown and confused messaging creating significant uncertainty about the region’s short and medium-term future.

According to the American brokerage firm Goldman Sachs, the Indian economy is subsequently expected to contract by 5% in the financial year 2021, representing the nation’s worst ever performance in this respect.

Despite this sustained economic decline, the Indian Rupee has fluctuated wildly during the last couple of weeks. But why is this the case, and what’s the long-term outlook for this emerging currency?

How has the INR Fared in Recent Times?

Unsurprisingly, the Indian Rupee edged lower during the first week of May, pairing back some of the gains that it made since its initial crash in March (when the lockdown was first announced at incredibly short notice).

Indian rupee
The INR has also enjoyed brief periods of growth against the USD more recently. Pixabay

This depreciation came after the INR actually made gains of 0.3% against the greenback at the end of April, capping three consecutive weeks of modestly rising sentiment for the INR/USD.

This decline came against the backdrop of an increasingly negative economic outlook, with agencies such as the International Monetary Fund (IMF) and World Bank providing decidedly downbeat forecasts for medium and longer-term growth.

However, the INR has also enjoyed brief periods of growth against the USD more recently, as it began to incrementally recoup losses and trade within a far wider range. This was largely attributed to better-than-expected Chinese export data, but this trend will not necessarily be sustained over time.

What Does This Tell Us About the Market?

The most recent rise in the performance of the INR also highlighted a slight increase in the market’s appetite for risk, with traders leveraging platforms such as Oanda to track daily price shifts and profit directly from these as the global sentiment improves incrementally against a backdrop of falling Covid-19 cases.

The INR remains a currency to avoid for risk-averse traders, however, particularly as a growing fiscal deficit and increased quantitative easing measures in India continue to restrict growth and devalue the rupee considerably.

rupee-Indian
The most recent rise in the performance of the INR also highlighted a slight increase in the market’s appetite for risk Pixabay

Also Read: Deepika Padukone Joins Hands With Instagram to Create A ‘Wellness Guide’

This, combined with rising daily volatility and a slight increase in demand, will definitely divide opinion in the forex market depending on each trader’s unique outlook and overall investment philosophy.

These factors also combine to create an increasingly negative long-term outlook, especially for the remainder of 2020.

Make no mistake; as quantitative easing continues and the base interest rate in India remains noticeably low, the value of the INR will depreciate incrementally over time while experiencing a significant shortage in demand.

[Disclaimer: The article published above promotes links of commercial interests.]

Next Story

The Best Ways to Finance Buying a Car

Buying a car? Dont worry, we have a number of options for you to choose from

0
Car showroom
Stop worring about savings while buying a car now. We bring to you various options to choose and decide from. Pixabay

So, you have set your sights on getting your own car. If you have saved enough, you can pay the entire amount at one go and not have to worry about anything. But the average person might not have that much money. If you too belong to that group, then you need not fret. Have a look at the various options that you have and decide for yourself.

1. Loan

Get a loan from a bank or any other finance company. If you have a good credit history, this option can turn out to be the cheapest. To get the best interest rate on your loan, you may need to look at different options. NowLoan can help you find the best lender.

Pros

  • You get the ownership right from the start
  • Formalities can be done online

Cons

  • Requires good credit history
  • It can affect your ability to borrow more
auto financing car
If you buy a car with the help of a loan then you get the ownership of the car from the start. Pixabay

2.Personal Contract Purchase

At the start, you pay a deposit. After that, you need to pay a monthly payment for a period of 2 to 4 years. Once the contract ends, you can pay a final amount of money and buy the car. Or, you can exchange the car for a new one and continue as usual. Or, you could simply not continue any further and return the car.

Pros

  • Greater choice after the end of the contract
  • Flexibility in terms of payment

Cons

  • You may have to pay extra for mileage higher than a certain limit
  • More tear and wear can result in higher charges

3.Personal Contract Hire/Lease

If you simply want to hire a car and not buy it, then this method can turn out to be cheaper. Under this process, you provide a deposit. You continue to pay monthly instalments until the end of the lease contract. Once the contract ends, you need to hand the car back.

beautiful car
You can hire a car if you want flexibility in terms of payment. Pixabay

Pros

  • Flexibility in terms of payment
  • Monthly payment includes servicing and maintenance costs

Cons

  • Deposit needed of 3 months payment
  • In the end, you have to give up the car

4. Hire purchase

In this payment option, you are hiring the car until you finish paying the whole amount. Once the last instalment is paid, the ownership of the car transforms to you. First, you need to pay a deposit of around 10% of the price. Then, you need to pay a monthly instalment for a certain period.

Read More: Live Music Can be Rocked Virtually Also Now

Pros

  • No extra charges for wear and tear or mileage
  • Flexibility in duration

Cons

  • You will get ownership only after you have paid the final instalment
  • The monthly payment is higher than other option

Conclusion

Each of the options listed above has its advantages and disadvantages. You will need to look into the ones that are most suitable for your needs. Calculate the total cost by including the deposit and each monthly payment. Know about extra or hidden charges you may have to pay. You can get in touch with a trusted broker like NowLoan online to get the most suitable lender and easily get that dream car.

[Disclaimer: The article published above promotes links of commercial interests.]

Next Story

Now Buy Galaxy Smartphones with Samsung Finance+ Home Delivery Service

Samsung Finance+ service is now available at your doorstep

0
galaxy-
Samsung announced that it has started the home delivery of Finance+on Tuesday. Pixabay

Samsung on Tuesday announced that it has started the home delivery of digital lending platform Finance+, making it simpler for customers to buy Galaxy smartphones at easy finance within the comfort of their homes.

According to the company, Finance+ is a unique and universally accessible digital lending platform that provides easy financing opportunity to consumers for purchase of Galaxy smartphones in India.

Samsung Finance+ service is currently available across 12,000 dealers in nearly 300 towns.

smartphone-
Customers looking to buy a Galaxy smartphone on finance can contact their neighbourhood dealers. Pixabay

“Samsung Finance+ is our ‘Make for India’ initiative towards financial inclusion and Digital India. We are confident that the home delivery of Samsung Finance+ will help millions of consumers in India,” Mohandeep Singh, Senior Vice President, Mobile Business, Samsung India, said in a statement.

To avail the Samsung Finance+ service, customers had to earlier walk-in at select dealerships. The company has partnered DMI Finance for its Finance+ service in India.

Customers looking to buy a Galaxy smartphone on finance can contact their neighbourhood dealers.

Read More: Actress Richa Chadha Shows her Love for Nature

The dealer will then send a Samsung promoter to the prospective customer’s house. The Samsung promoter will help the customer complete the loan journey in the comfort of his/her home.

After filling in their personal details for a simple KYC verification and credit scoring, customers will get multiple offers on various Galaxy smartphones.

Given the importance of social distancing in the current circumstances, Samsung’s new initiative will ensure the customer gets finance for Galaxy smartphone without the need of visiting a store. (IANS)