Economy
Foreign assets in India increased to $776.1 billion in December quarter

Foreign assets in India increased by $39.9 billion due to higher deposits, direct investments, equity and other investments


During the December quarter, foreign owned assets in India increased by $39.9 billion to $776.1 billion over the previous quarter while Indian residents’ financial assets abroad, increased by $22.2billion at $458.9 over the previous quarter, reveals the Reserve Bank of India (RBI)  in its report on International Investment Position (IIP).
 

Net claims of non-residents on India

During the December 2013 quarter, net claims of non-residents on India (net IIP) increased by $17.7 billion to $317.2 billion compared with previous quarter. This change in the net position reflected an increase of $39.9 billion in the value of foreign-owned assets in India vis-à-vis an increase of $22.2 billion in the value of Indian Residents’ financial assets abroad.
 

Source: www.rbi.org.in
 

Indian residents’ financial assets abroad

Indian residents’ financial assets abroad increased by $22.2 billion to $458.9 billion mainly due to a $16.7 billion increase in reserve assets and $5.8 billion rise in other investment abroad; trade credit and currency and deposits. Direct investment abroad observed marginal decline of $0.3 billion, the RBI said.
 

Foreign-owned assets in India

Foreign-owned assets in India increased by $39.9 billion to $776.1 billion, compared with previous quarter, due to a $23.6 billion increased in currency and deposits component of ‘other investment’.
 

Direct investment in India increased by $8.6 billion and portfolio investment in India increased by $5.6 billion during the December quarter. While equity investment increased by $8.0 billion, debt investment decreased by $2.4 billion. Among other investment liabilities, trade credits declined by $1.2 billion and loans increased by $3.2 billion.
 

Effects of Rupee Appreciation

Variation in exchange rate of rupee vis-à-vis other currencies affected change in liabilities. Equity liabilities increased by $16.3 billion, due to the  stock valuation effect resulting from rupee appreciation, while net inflow was $11.5 billion during the period.
 

Composition of External Financial Assets and Liabilities

Reserve assets continued to have the dominant share (64.0%) in India’s international financial assets in December 2013, followed by direct investment abroad (26.1%). Direct Investment (29.2%), portfolio investment (22.8%), loans mainly ECBs (22.1%), trade credit (11.4%) and currency and deposits (12.7%) were the major constituents of the country’s financial liabilities, the RBI said.
 

Source: www.rbi.org.in
 

External Debt Liabilities vis-à-vis External Non-Debt Liabilities

The share of non-debt liabilities decreased marginally to 44.8% as at end-December 2013 from 45.1 percent at end- September 2013. (Refer: Table 3)

RBI issues IIP every quarter, which helps in understanding sustainability and vulnerability of the economy’s external sector. IIP shows the value and the composition of financial assets and liabilities of residents of an economy to non-residents.

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Targeting Dr KC Chakrabarty

We suddenly have a premature exit of a great deputy governor who favoured competition among banks, was against banks selling third-party products and was pro-consumer

On 25th April, one of the most forthright and honest deputy governors (DG) of the RBI will retire—three months before his term ends. It is befitting that Dr KC Chakrabarty, who got the post and an extension without the customary lobbying, has chosen to quit before his term ends.

Unlike many colleagues and predecessors, he is not hanging on in the hope of another extension or a post-retirement sinecure. Dr Chakrabarty’s forthrightness has always disconcerted the denizens of Mint Street; but what made them really squirm is that he is usually right.

In August 2010, the then governor, Dr D Subbarao stripped Dr Chakrabarty of key portfolios following a deliberate set up. A vitriolic media report was used to drum up frenzy over his alleged comment that interest rates ought to have been hiked more aggressively to control inflation, claiming that it had rocked the bond market. Nobody has ever apologised to Dr Chakrabarty for the humiliation, although he has been proven spectacularly correct.

After holding off interest rates then, RBI was forced to hike interest rates so aggressively, that it caused a huge rift between the finance ministry and RBI governor Dr Subbarao, who had come to RBI as a blue-eyed boy of the government.

Although most of his portfolios were restored in a subsequent reshuffle, RBI has remained a faction-ridden and non-transparent organisation, which hampers its ability to frame policy transparently and quickly. Consequently, many decisions that would benefit ordinary people and depositors take forever.

Dr Chakrabarty often said that it took him several years to have some obvious pro-customer decisions implemented. One of these was to bar the pre-payment penalty that banks impose on home loan borrowers, to prevent them from switching to other borrowers. Since banks discriminated against existing borrowers by offering lower interest to new customers, the scrapping of foreclosure charges levelled the playing field for customers. He also stopped banks lending below their base rate and, more recently, from fooling customers with fake zero-interest loan offers during festivals.

Dr Chakrabarty has also been most vocal about mis-selling of third-party financial products by banks but was unable to stop it during his tenure. However, to Dr Chakrabarty goes the credit for ensuring one of the biggest ever payments by a foreign bank to actor-singer Suchitra Krishnamoorthi in a case of mis-selling. Despite resistance at various levels in the central bank, inaction by the insurance regulator and part-action by the capital market regulator, it is to his credit that Hong Kong & Shanghai Banking Corporation (HSBC) was forced to make a settlement.

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COMMENTS

Dayananda Kamath k

3 years ago

why action was not initated aainst bankers and chartred accountants who gave certificate regarding tds on royalty and facilitated remittence royalty by nokia. why rbi has not taken steps to see whether banks have proper proceedures and guielines after moving from fera to fema. today there is no controll on foriegn exchange fema now stands for foriegn exchange mismanagement act.with active support of rbi.
rbi has left verification and follow up of bills of entry of less than usd one lakh to bankers. but none of the banks have developed infrastructure for monitoring the same nor rbi is bothered. nor there is mechanism to follow up export advance received. whether export has taken place. all these matters have been brought to the notice of rbi. but no action.just like govt squandering borrowed money. rbi also is squandering borrwed forign exchange.

Dayananda Kamath k

3 years ago

to day rbi is also functioning as a fiefdom and not a regulator. why action was not initiated against banks( there are 89 bank branches as per rti reply) which allowed third party import of gold for almost 5 years in violation of fema, banking laws and import export policy. rbi just isued a circular after 5 years that it is not in order. collected data but did not initiate action. nor reported it to enforcement directorate for action. and even did not intervene when one of the bank started harrassing the auditor who reported this transaction 3years before the circular. even after bring it to the notice of rbi.

vipan mahajan

3 years ago

I fully agree with the comments of Mr. Behera.
His penchent for playing to the gallery, self rightousness and rigidity to the extreme was never a virtue for a person at such a position.

Vikas

3 years ago

The Business Standard article published on April 4 about the extensive recovery of NPAs and UBI's likely turnaround in March quarter is interesting to read.........Someone in the bank has definitely saved a PSU Bank!! Would love to know who?

SUNIL KUMAR HEMNANI

3 years ago

Honesty is the most difficult policy in life & business.The Dy RBI Govenor leaving early must have a reason ,wonder what it could be ? Surely he should have stayed the remainder period and done good for the public at large

Sam Koshy

3 years ago

Banks should not be allowed to sell third party products. If they do, the customers hard earned money will be lost. Dealing with finance need continuous follow up. Every person's financial plan varies from other. If different employees are coming frequently for personal Financial portfolio management, then it's assured that the customer's hard earned money is left for playing with someone who has nothing to do with investments & planning.

REPLY

rajivahuja

In Reply to Sam Koshy 3 years ago

I agree with Sam Koshy's observation that bank should not be allowed to sell third party products.

Prashant Bansal

3 years ago

I wish he joins AAP party where he can take his struggle much ahead.

Khaja Mohiuddin

3 years ago

India is lacking encouragement to honest people thus depriving the improvement, controlling the corruption, lessening the political influence etc. A strong Government assisted by intellectuals to foresee the necessity of growth and development etc.

Ramesh Poapt

3 years ago

Superb!!!

rajivahuja

3 years ago

I bet there was a powerful lobby wanting to dislodge him. Leading banks ,big names against him.

Khaja Mohiuddin

3 years ago

We suddenly have a premature exit of a great deputy governor who favoured competition among banks, was against banks selling third-party products and was pro-consumer. On 25th April, one of the most forthright and honest deputy governors (DG) of the RBI will retire—three months before his term ends. It is befitting that Dr KC Chakrabarty, who got the post and an extension without the customary lobbying, has chosen to quit before his term ends.

Customer service within the law should be encouraged. The Banks should not sell third-party products (insurance) thus diverting from their regularly banking service more particularly credit management, now stands to lacks of crores of rupees as NPA, who is responsible? India needs genuine laws and policies and the organisations given the task to perform within their limits. Banks going in for insurance and selling other products is diverting attention, the employees given target will focus on this allied activity forgetting his main job/role.

REPLY

rajivahuja

In Reply to Khaja Mohiuddin 3 years ago

I whole heartly agree with your observations. But in this society there no place for a man favouring policies which are in interest of common man like me & you.Big names are involved in this .

SuchindranathAiyerS

3 years ago

Simply not more Khangress than the Khangress?

Yerram Raju Behara

3 years ago

You seem to be presumptuous in dissociating lobbying for his key post. Second, while he is blunt and forthright in several observations, what he could have done from being Dy. Governor, he chose the impetuous path of announcing on public platforms platitudes. His vocal assertions of financial inclusion have derided the primary cooperatives and nearly buried them. He could have ushered in reforms in PACS, DCCBs and SCBs as a PACK and helped institutional building at grassroots instead of pitching his fork on new institution of BCs over which the principals - commercial banks are not comfortable. It is of course our good culture to say goodie goodies when people leave their positions and I commend your article on that count and not on other grounds. Impetuosity did not result in impatience for seeing the expected results.

Subrata Roy’s Massive Rs10,000-crore Bail

By asking employees to contribute to his bail, Roy still seems to be in his own world, unable to comprehend the reality around him

Since Subrata Roy likes big numbers, it seems fitting that the Supreme Court, on 26th March, set an extraordinary figure of Rs10,000 crore (Rs5,000 crore to be deposited  upfront and Rs5,000 crore in bank guarantees) as a condition for his release, but agreed to defreeze bank accounts. The flamboyant head of the Sahara pariwar had, by then, spent 22 days in custody for failing to come up with a plan to deposit Rs20,000 crore as has been ordered by the apex court in its landmark judgement of August 2012. The bail terms were significantly more onerous than Sahara’s proposal to pay Rs2,500 crore immediately and the balance in three instalments by 2015.

Meanwhile, Sahara’s bizarre defiance continued unabated. On the eve of the SC hearing, its PR team put out a statement by its counsel, Keshav Mohan, making another set of allegations against the Securities & Exchange Board of India (SEBI), which it has previously called a ‘sarkari gunda’.

This time, Mr Mohan accused SEBI of trying to siphon off the Rs5,120 crore it had deposited with the regulator, under the guise of carrying out court orders. It also charged SEBI with ‘malafide intent’ and ‘sinister’ motives in making false claims about its inability to trace Sahara investors while trying to ‘usurp’ investors’ money.

The case certainly sets an unsavoury precedent about the kind of allegations that accused entities can make against a regulatory body. The reaction of the courts as well as SEBI is being watched intently by corporate India as well as thousands of ponzi schemes that proliferate around the country.

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COMMENTS

rihanahmad

3 years ago

Keep up the good work . India would indeed become a banana republic if the likes of Sahara are not booked for flouting the law . The whole world is watching ..how this money laundering entity is calling everyone bad names and taking out full page ads . I wonder why the Serious Frauds Investigation is not being initiated , if there is a smell of fake depositors , inter company transfer of money , over valuation of properties , fake ownerships of land , etc .

Manoj Mehra

3 years ago

I don't understand why Supreme Court take action against those who didn't done any crime. Sahara India Pariwar is one who have a clean chit. Supreme Court just trying to defame Sahara .

REPLY

rihanahmad

In Reply to Manoj Mehra 3 years ago

The SC is 100% right . SEBI has done a damn good job of booking this group and its myriad ponzi schemes which have targeted the poor rural investors . Everything that Sahara has done seems to be illegal and designed to inflate profits and make tall promises . It is a money laundering entity par excellence .

Manoj Mehra

3 years ago

why don't SC and Sebi take such type of action against corrupted politician who did huge amount of money laundering or scandal.Even the charges against subrata roy is not clear.

suchita

3 years ago

Sahara Shree is Patriotic and biggest philanthropist, above all he is thorough gentleman with a great heart. His affectionate and caring nature for others has made him God Father. His trouble is our trouble and justice should come to him with due consideration of what he contributed to people of India.

RAJESH PATEL

3 years ago

Nobody is above the Law? keep up the good work Moneylife

pranave

3 years ago

Justice cannot be denied to a true and kind individual #subrataroy...

viv

3 years ago

It is the unprofessional attitude of some of the officials of SEBI which is forcing such unfortunate remark against the entire SEBI. The observations of "fictitious investors" without any investigation / enquiry is enough for justifying their attitude. The world largest bail amount for liberty from detention without any charges proves the motives behind the entire case instead of a proposal wherein the accountable of both the parties i.e. SEBI & Sahara are clearly defined. It is very surprising why SEBI is spending money of its legal team which is definitely not required for fighting the case in current scenario.

REPLY

Sahil

In Reply to viv 3 years ago

Seems like Moneylife has made it a habit to post each an every news against Sahara, that too by taking topics out of context. Journalism cant get anymore biased than this.

rajivahuja

In Reply to Sahil 3 years ago

Wake up !

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