RBI tells exporters to sell dollars to give rupee a leg up

May 11, 2012

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Mumbai, May 11: The Reserve Bank of India ordered exporters to convert half of their foreign exchange earnings kept in bank accounts into Indian rupee to prop up the worst-performing BRICS currency, a day after it closed at a record low, prompting fears of a further slide.

But the relief lasted only a few hours before the rupee resumed its decline since the order could bring in just about $3 billion, enough to cover five days of deficit.

The RBI also cut banks' intra-day positions in currency trade to five times of the net overnight open positions, which is set by the central bank as part of curbs announced on December 15. The overnight positions are not disclosed by the central bank.

More measures, including funding crude imports from foreign exchange reserves, a new US dollar mobilisation scheme, or even a sovereign dollar bond sale to boost the currency, could be on the cards, traders speculated.

The early rally faded soon with the rupee coming off highs of 52.95 to the US dollar to close at 53.44. Its all-time closing low was 53.83, on Wednesday.

Most currencies falling against dollar

Despite a series of measures from the central bank, many believe that weak macroeconomic variables such as fiscal and current account deficits, and worsening global liquidity due to deteriorating European sovereign credit crisis may diminish the effectiveness of its response.

"The RBI announced two measures that will ease, (and) slightly reverse near-term pressure on INR, but neither fixes the underlying problems that are causing INR to depreciate," said Rajiv Mallik, senior economist, CLSA Singapore. "Further, USD squeeze also has adverse implications for onshore INR liquidity."

Half the balances in the so-called Exchange Earners' Foreign Currency (EEFC) accounts should be converted into rupee balances within a fortnight and that holds true for future earnings as well, said the central bank in a notification. Exporters will be allowed to buy foreign exchange only after exhausting US dollar deposits in their accounts.

Most currencies are sliding against the greenback as global investors retreat to the safety of US dollar amid resurgence of doubts over the future of the Euro.

The rupee has been hurt more than others since India needs US dollars from outside to pay for imports as it does not export enough to pay for imports. Most big emerging countries have a surplus since they earn more US dollars from exports than needed to pay for imports.

"The facility of EEFC scheme is intended to enable exchange earners to save on conversion, transaction costs while undertaking forex transactions in future," said the central bank. "This facility is not intended to enable exchange earners to maintain assets in foreign currency, as India is still not fully convertible on capital account."

Some recent measures of the central bank are akin to its actions during the Asian crisis of 1997-98, when it ordered companies to bring in the proceeds of share sales in the form of Global Depository Receipts.

In December last year, the central bank brought in measures to curb speculation, which helped the rupee rally in the March quarter. It has reversed since due to the government's tax policies directed at overseas investors that have increased uncertainty and also because of lack of economic reforms.

With the current account deficit, the excess of imports over exports, at 4.3% of the gross domestic product and portfolio flows tapering off, the currency could be under renewed pressure if either exports do not rise sharply, or imports do not slow.

Both are unlikely now given the state of the economy. Subsidised petroleum products keep demand high, and import of gold continues due to high inflation expectation. Slowing European economies cap export growth.

Trade deficit for April stood at $13.4 billion in April, after hitting a record of $185 billion last fiscal. Exports rose 3.2% while imports grew 3.8% to $37.9 billion.

A breather could come in the form of unconventional measures, as in the past. "There could be some unconventional measures such as the IMD (India Millennium Deposits), or the RIB (Resurgent India Bonds)," said Rohit Bammi, partner at consultants KPMG. "There's a possibility of routing crude imports through foreign exchange reserves to take out the volatility."

At the turn of the century, India raised funds through the Resurgent India Bonds, and India Millennium Deposits to improve the reserves position. These involved paying high interest rates to lure overseas Indians.

Although neither the government nor the central bank has committed to such programmes, speculation is rife due to the sliding rupee. Indeed, some believe it may be the right time to float USD sovereign bonds that could bring in some fiscal discipline and also create a benchmark for Indian corporates keen to borrow overseas.

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News Network
April 15,2020

New Delhi, Apr 15: With 1,076 new COVID-19 cases reported in the last 24 hours, India's tally of coronavirus cases has risen to 11,439, said the Union Ministry of Health and Family Welfare on Wednesday.

Out of the total tally, 9,756 cases are active while 1,306 patients have been cured/discharged and migrated.

With 38 new deaths reported in the last 24 hours, the death toll rises to 377.

According to the ministry, Maharashtra is the worst-affected state with 2,687 cases of which 259 patients have recovered/discharged while 178 patients have lost their lives due to the virus.

Delhi comes in at the second position with 1,561 cases of which 30 patients have recovered while 30 patients have succumbed to the virus.

Tamil Nadu is the third state with over 1,000 cases at 1,204 cases of which 81 have recovered and 12 have died due to the deadly virus.

Rajasthan is nearing the 1,000 mark with 969 cases of which 147 people have recovered while 3 patients are dead. Madhya Pradesh reported 730 cases including 51 patients recovered and 50 patients dead.

On Tuesday, in an address to the nation, Prime Minister Narendra Modi announced that the 21-day national lockdown has been extended till May 3.

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News Network
March 18,2020

Muzaffarpur, Mar 18: Prisoners in the central jail here are working overtime to produce facemasks to prevent the deadly COVID-19 striking. In addition to providing protection to fellow inmates and prison staff, the produce will be shared with nine district and sub jails falling under Muzaffarpur Central Prison as well, Deputy Superintendent of the jail Sunil Kumar Maurya said. From supplications at places of worship to hectic activities at the biggest hospital, this north Bihar district is witnessing invocation of all powers, human and otherwise, to prevent novel coronavirus hitting them.

Although nobody has so far tested positive for the dreaded virus in Bihar, where the state government has imposed a semi-lockdown as a preventive measure, Muzaffarpur which hit the headlines last year for losing close to 200 children to an outbreak of brain fever seems determined not to fall prey to yet another virulent affliction.

On making of facemasks by about 50 prisoners, the Deputy Superintendent of the jail said, "We have had a tradition of producing fabric at the Muzaffarpur Central Jail. An idea was floated why not use the skills acquired for producing masks which are in great demand but in short supply.

The local administration seems impressed with the endeavour of the social outcasts to rise to a global challenge.

"It is a welcome step. Despite all precautions, we never know who is going to catch the infection at which place. The efforts by prisoners to protect themselves and the staff manning their premises is laudable. "Full assistance will be provided to Central Jail authorities in supply of the masks to other prisons," Sub Divisional Magistrate (East) Kundan Kumar said.

A conservative town inhabited by a deeply religious citizenry, Muzaffarpur is also witnessing prayer congregations at temples and mosques in keeping with the tradition here of people of all faiths coming together when faced with a major challenge.

The Garib Nath temple, a renowned shrine devoted to Lord Shiva which attracts devotees from far and wide, is witness to the power of faith trumping the biggest fears as the footfall seems to have increased since the outbreak.

The temples mahant Vinay Pathak says, "faith can move mountains. People come here in search of strength to face a crisis which has caused worldwide scare. We advise the visitors to conduct regular 'havans' at their houses just like we have been performing here. "The smoke emitted by burning of purified offerings cleanses the air and, who knows, could be an antidote as well," Pathak added.

Chanting of 'Mahamrityunjay mantra', which the faith believe to be potent enough to dispel illness and untimely death, is taking place round the clock at the shrine in addition to 'havans', the mahant said.

Just a few yards away stands the Chhata Chowk mosque where large number of devotees appear in skull-caps to offer namaz.

"It is a pandemic threatening to engulf the entire world and dua (prayers) are needed as much as dawa (medicines). May God, who is one, listen to the common wish expressed by humanity in myriad ways," says Imtiaz Ahmed, a devout local resident.

Meanwhile, the health authorities are busy with their own efforts, not leaving prevention and cure to divine intervention.

District Medical Officer Shailesh Kumar Singh says a total of 42 people here who have come from abroad, have been tested but their results have been negative.

"Nonetheless, a five-bed special ward has been set up at the Sadar Hospital, manned by medical staff armed with a special kit comprising medicines and other logistics required for primary care of those with suspected symptoms," he said.

The SKMCH referral hospital, which bore the brunt of last years brain fever epidemic accounting for over 120 deaths is fully geared up to meet the latest challenge.

SKMCH superintendent Sunil Shahi says "we have a 30- ward insulation ward ready. Samples of patients with suspected symptoms are being routinely sent to RMRI, Patna. We appeal to all to remain alert, but avoid panic."

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News Network
April 28,2020

New Delhi, Apr 28: Outstanding loans amounting to Rs 68,607 crore of top 50 wilful bank loan defaulters in the country including firms of Mehul Choksi and Vijay Mallya have been technically written off till September 30, 2019, the Reserve Bank of India said in a RTI reply.

Absconding dimantaire Choksi's company Gitanjali Gems tops the list of these defaulters with a whopping amount of Rs 5,492 crore, according to the list.

This is followed by REI Agro with Rs 4,314 crore and Winsome Diamonds with Rs 4,076 crore.

Rotomac Global Private Limited has funded advances of Rs 2,850 crore which have been technically written off and Kudos Chemie Ltd with Rs 2,326 crore, Ruchi Soya Industries Limited, now owned by Ramdev's Patanjali, with Rs 2,212 crore and Zoom Developers Pvt Ltd with Rs 2,012 crore being the other companies.

Mallya's Kingfisher Airlines figures in the list at number 9, with outstanding of Rs 1943 crore which have been technically written off by the banks.

Forever Precious Jewellery and Diamonds Private Limited has loans of Rs 1,962 crore written off while Deccan Chronicle Holdings Limited have Rs 1915 crore written off loans.

Choksi's other firms Gili India and Nakshatra Brands also have loans of Rs 1,447 and Rs 1109 crore respectively written off.

REI Agro of Jhunjhunwala brothers is already under the scanner of ED. The CBI and ED are also probing alleged fraud by the owners of Winsome Diamonds.

Vikram Kothari's Rotomac is the fourth in the list. He and his son Rahul Kothari were arrested by the CBI for bank loan default.

In the last Parliament session, Rahul Gandhi had asked the government to provide a list of top 50 bank loans defaulters in the country, leading to sharp exchanges and uproar in the Lok Sabha.

"The information on top 50 wilful defaulters and their sum of funded amount outstanding and amount technically/prudentially written off as on September 30, 2019 reported in CRILC by banks, is provided," the RBI said in its written response dated April 24.

In his application, RTI activist Saket Gokhale had sought the list of defaulters as on February 16, but the RBI said the requested information is not available.

The RBI said that according to section 8 (1)(a) of RTI Act 2005 read with para 77 of Supreme Court judgement of December 16, 2015 in Jayantilal N Mistry case, information on overseas borrowers is exempted from public disclosure.

"Data is as reported by banks and RBI will not be held responsibly or accountable for any misreporting and/or incorrect reporting by the reporting entities," the RBI said in the written reply to the RTI query.

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