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RBI cuts Repo rate by 25 bps to bring down inflation

RBI cuts Repo rate

RBI cuts Repo Rate by 6.25%: Amidst of slow growth rate and high inflation, to bring down the situation under the standards, Reserve Bank of India has announced some measures related to the nation’s economy. A surprising step by RBI has however brought a positive impact on share market immediately.

The rupee also gained strength and stood at 6.40 against the dollar. The decision to cut down the Repo by 0.25% is the biggest and sudden surprise before the festival.Reserve Bank of India Governor, Urjit Patel at a news conference in Mumbai has announced the rate cut.

What is REPO rate?

Repo rate is the rate of interest at which the banks in India borrow from the RBI whereas the Cash Reserve Ratio (CRR) remains unchanged. CRR refers to the amount parked mandatorily with the RBI. Six-member panel in the RBI has taken the unanimous decision to cut the rate.Repo rate cut is directly related to the loaning interest rate to customers.

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The lending rates are also to be cut down following this impact. At present, the repo rate stands at 6.25% after the decline from 6.50%. The present rate is the six years lowest figure.

The loans are at present stand between 9% – 9.5% for customers. Home and vehicle loans will now become cheaper. The Every Month Installment (EMI) will also come down as the interest rates have been lowered.

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Present and future interest are anyways will be effective as per the rate announced by the banks after the repo rate decrease. The previous loans can also be revived and opted by the consumers based on the calculations of the bank.

For the past one and half year that is from January 2015, RBI has cut down the Repo rate six times to control the inflation growth in India. Food inflation is the key factor. Future analysis of Gross Domestic Products (GDP) is also dependent on the Repo rate. Hence to have a flourishing economy, RBI is taking all the measures possible.

All You Need to Know About Urjit Patel the New RBI Governor

New RBI Governor

After many days of suspense finally, the PMO had appointed Urjit Patel, RBI’s deputy governor as the new RBI governor. The appointment was made after interviewing all the shortlisted candidates at prime minister’s office for the post of RBI Governor.

What makes him appropriate for the Post? This question is running around the financial sector from past two days. Here is what you need to know about him.

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All you need to know about Urjit Patel

Urjit Ravindra Patel (53) will take up as New RBI Governor from 4th September 2016 becoming the 24th person to take the seat. Raghuram Rajan his successor has been most appreciated for controlling inflation.

Urjit was not an Indian. He was born in Kenya in the year 1963 on October 28. His place of birth and his Kenya citizenship was most discussed and thought that would obstruct his promotion. But his expertise has left all the other reasons behind.

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Urjit Patel received his bachelor’s degree in economics from London School of Economics. He completed MPhil from Oxford University in 1986. He completed his PhD from Yale University in 1990 in Economics. His High education qualification in the area of Economics becomes the first step to shortlist.

Apart from his qualification he is well experienced. He worked for IMF desks in US, India, Bahamas and Myanmar. Then he was deputed to RBI from IMF working in the areas of development of the debt market, banking sector reforms, pension fund reforms, targeting of real exchange rate.

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Patel took up as Consultant to the Government of India in the Ministry of Finance from 1998-2001. Patel has worked in various high-level committees in both central and state levels. In 2013 Patel was appointed as Deputy Governor of RBI where now new RBI Governor of India.

Previously the posts in which Mr Patel worked were President (Business Development), Reliance Industries Limited Advisor, Boston Consulting Group Executive Director, Infrastructure Development Finance Company (1997-2006) Non-Executive Director, Gujarat State Petroleum Corporation Limited.

Patel’s grandfather migrated from Gujarat to Kenya during the British government. His father was born in Kenya and was a successful entrepreneur in Nairobi. He had a business of Spare parts. Patel’s father passed away recently.

He has impressed many economists including P V Narasimha Rao, Dr Manmohan Singh, P Chidambaram, Narendra Modi, Arun Jaitley, and Raghuram Rajan. He is the most admired RBI person by many Officials and politicians. Experts say that the Stock market is expected to cheer the appointment of the new Reserve Bank Governor.

RBI launches’ Sachet ‘ Portal to Curb illegal Money Collection

RBI Sachet Portal

RBI had launched Sachet Portal, a new website which will be helpful to curb illegal money collection by companies. RBI governor Raghuram Rajan has launched the website officially.Through this site, public can obtain all the information regarding the entities who accepts deposits.

They can also lodge complaints and share information regarding illegal acceptance of deposits, said Reserve Bank of India Governor Raghuram Rajan while launching the web portal.

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“Initiating quick follow up and taking cases to a logical conclusion by punishing the guilty is paramount to deterring entities in future from carrying out unlawful activity. I hope ‘Sachet’ would help regulators in doing this as much as it would help members of public in depositing their hard earned money with legitimate companies by giving them timely information about them,” Rajan said.

The website will help in increasing the coordination between regulators and state government agencies. The site also provides regulations prescribed by all financial regulators for public.Deputy Governor S.S. Mundra said that “Members of the public can file and track a complaint on this website if any entity has illegally accepted money from them and defaulted in repayment of deposits. They can also share information regarding any such entity on this portal,”

The sachet portal has a section of a closed user group for State Level Coordination Committee (SLCCs) where they can share all the information related to share market intelligence and other information about their activities minutes of meetings etc. in real time.

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SLCC’s include RBI, Securities and Exchange Board of India (Sebi), National Housing Bank (NHB), Insurance Regulatory and Development Authority (IRDA), Registrar of Companies (ROC), including state-level coordinating departments, like police, law, etc.

“I hope ‘Sachet’ (Hindi for alert) would help regulators in doing this as much as it would help members of public in depositing their hard earned money with genuine entities by giving them timely information about these entities,” Rajan quoted that during the launch.

The brand new website sachet has been designed in a very appealing way using cartoons and slogans like

Joining money chain may put you in pain
Chit fund or cheat fund
Don’t be greedy; money doesn’t grow on trees

Along with the list of entities registered with various government financial regulators, it also provides a provision to file a complaint and know about the status of the complaint.

SEBI to allow mutual funds purchases via digital wallet

SEBI to allow mutual funds purchases via digital wallet

Will cashless and hassle free transactions rule the world of mutual funds? Maybe yes, SEBI (Securities and Exchange Board of India) is holding talks with RBI (Reserve Bank of India) to allow the use of e-wallet/ digital wallet for purchasing mutual funds. Both the capital markets regulator and financial giant are yet to frame the regulations for digital wallet use.

Drawbacks in the current system:

According to the RBI norms, customers can use online e-wallet without KYC for transactions up to 10,000 INR and transactions above 10,000-1 lakh; KYC is mandatory. E-wallet is not applicable for purchases above 1 lakh. But all mutual fund transactions need KYC as a mandatory requirement.

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The reason why SEBI wants the involvement of digital wallet is to promote all the investors to take up the hassle less and paper free KYC procedures. This can be done using the digital wallet, in case the RBI allows. This can help to meet two demands that SEBI presently have

  • Increase mutual fund investments
  • Reduce money laundering via cashless transaction.

Current developments:

SEBI is all set to sell the mutual funds through online marketplaces like Flipkart and Amazon.in. According to the person familiar with the developments, the number of customers visiting the e-commerce portals is increasing on daily basis. Hence, the above step will be justifiable.

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Advantages of digital wallet:

The use of the digital wallet for mutual fund purchase not only promotes cashless transactions but also helps in curbing the black money circulation. The money stagnant in the digital wallet is currently not earning any interest rates, but if the investment is allowed, customers can benefit from the lucrative returns. The simple transaction procedures can attract people in all the fields to invest in mutual funds and the financial markets.

Raghuram Rajan says “CIBIL will Provide One Free Year Credit Report”

RBI governor said CIBIL will Provide One Free Year Credit Report

CIBIL (Credit Information Bureau of India Limited) will soon provide one free credit report a year.During a seminar held on Transformation of Rural India through Financial Inclusion, RBI Governor Raghuram Rajan stated that CIBIL might soon provide a one free credit report a year.

To get a CIBIL report from the banks; Individuals need to pay a minimum of Rs 500 to get their credit report.As per the latest announcement by the end of the year,CIBIL will start providing a year free credit report which helps them to check their credit rating scale or score.

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CIBIL score or Company Credit Report will let you understand your credit worthiness to fast track your company growth. So build a good transaction one has to maintain a healthy score growth, Says Rajan

Reserve Bank of India Chief Rajan also explained the importance of keeping a good CIBIL Score.He said that every individual should have more than a score of 750 for the beneficial purpose to avail loans and credit cards. He also told to maintain timely payments to get a good CIBIL score.

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Harshala Chandorkar, CIBIL Senior Vice President, said that the organisation is focussing on 360-degree view for consumer beneficial purpose. If you need to access to money either for the loan or credit card, you should maintain you CIBIL score of 750+.

Dr Rajan’s tenure as RBI governor will end on 4th September and might succeeded by Arvind Panagariya, Vice Chairman of NitiAayog.

CIBIL, the Credit Information Company (CIC) found in August 2000 has its headquarters in Mumbai. Having a slogan of “Empowering you”, it provides various services like Financial Research, Risk and Policy Advisory. The organisation maintains a record of individual payments which pertains to loans and credit cards.