Regulations
FSDC must limit itself to coordination: RBI governor

The governor also expressed reservations on the recommendations of the Financial Sector Legislative Reforms Commission, which calls for making the FSDC a statutory body to ensure financial stability

Reserve Bank of India (RBI) governor D Subbarao today said the Financial Stability and Development Council (FSDC) should act only as a coordinator between financial regulators for ensuring financial sector stability.

 

“There should be a coordination body such as the FSDC, but the coordination body should be just that—a coordination body which will have more importance during a crisis time—but in normal times, will be at a low level equilibrium,” the governor said.

Subbarao also expressed reservations on the recommendations of the Financial Sector Legislative Reforms Commission, which calls for making the FSDC a statutory body to ensure financial stability and have a board headed by the finance minister to oversee the same.

 

Under the present FSDC arrangement, the RBI governor is a chairman of a sub-committee as the overall head is the finance minister.

 

“In the Reserve Bank, we have some reservations about that sort of an arrangement. In particular, the concern is that the responsibility for financial stability can be given to a committee rather than to an institution,” Subbarao told a banking summit organised by the Indian Merchants Chamber (IMC) in Mumbai.

 

The FSLRC was headed by retired Supreme Court judge BN Srikrishna and submitted his report in March.

 

The report called for a total overhaul of the existing financial system by merging the oversight functions of market, commodity, insurance and pension regulators.

 

“By the year 2020-25, we hope to achieve $13-$14 trillion economy. An ambition cannot be achieved unless there are steps taken towards it. Therefore, you need something that is drastic, something that is total overhaul of the existing financial system,” Srikrishna had said in his report.

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COMMENTS

M G WARRIER

4 years ago

To those who were following the relationship issues between Finance Ministry on the one side and all financial sector regulators on the other side, it was evident from the very beginning that setting up FSDC was the formalization of the continuing efforts by Finance Ministry to act as a super regulator over all regulatory bodies in the financial sector. Experts in the field had minced no words to point out that this will destabilize the equilibrium deftly built up by eminent persons who headed Finance Ministry and RBI in the formative years of financial regulation in India and consciously maintained by their successors till the recent past. Viewed in this context, the concern expressed by Dr Subbarao on June 5 at the 7th International Banking and Financial Conference 2013 should get the attention it deserves from all stakeholders.

Sensex, Nifty’s struggle to move up may gain strength: Wednesday Closing Report

If the Nifty manages to close above 5,965, we may see a few days of gains
 

The market snapped its three-day losing streak and closed marginally higher on gains in oil & gas and realty sectors. If the Nifty manages to close above 5,965, we may a few days of gains. The National Stock Exchange (NSE) recorded a higher volume of 50.77 crore shares and advance-decline ratio of 668:693.

 

The market opened lower as the RBI on Tuesday said that is plans to take early actions against the banks whose officials were caught in a sting operation. Weak global cues also weighed on investor sentiments. Asian markets were in the red in morning trade after Japanese prime minister Shinzo Abe’s plan to up special economic zones to attract foreign businesses failed to enthuse investors.  US market fell in overnight trade on concerns of the Federal Reserve’s move.

 

The Nifty opened 11 points down at 5,908 and the Sensex resumed trade at 19,532, a cut of 14 points from its previous close. Intense selling in capital goods, consumer durables, IT and fast moving consumer goods sectors led the benchmarks to their lows in the first hour itself. At the lows, the Nifty fell to 5,984 and the Sensex dropped to 19,441.

 

Meanwhile, the HSBC/Markit purchasing managers’ index for the services industry inched up to 53.6 in May, pointing to a solid expansion in output, one that was the fastest in three months. The index had registered 50.7 in April.

 

The market made a laboured attempt to emerge into the green in mid-morning trade but sellers outnumbered buyers and pushed the indices lower again.

 

The benchmarks gained momentum in noon trade on buying in select blue chips. But the indices were hovering near their previous closing levels in the second half of the trading session.

 

The market hit its intraday high shortly after 2.00pm with the Nifty rising to 6,015 and the Sensex inching up to 19.604.

 

Among the broader indices, the BSE Mid-cap index added 0.06% and the BSE Small-cap index rose 0.12%.

 

The top sectoral gainers were BSE Oil & Gas (up 1.77%); BSE Realty (up 1.35%); BSE Metal (up 0.40%); BSE PSU (up 0.33%) and BSE Capital Goods (up 0.31%). The main losers were BSE IT (down 0.76%); BSE TECk (down 0.59%); BSE FMCG (down 0.50%) and BSE Consumer Durables (down 0.45%).

 

Out of the 30 stocks on the Sensex, 18 settled higher. The top gainers were Reliance Industries (up 2.56%); ONGC (up 1.95%); Sun Pharmaceutical Industries (up 1.91%); Hindalco Industries (up 1.34%) and Maruti Suzuki (up 1.28%). The major losers were Wipro (down 1.59%); Infosys (down 1.32%); HDFC (down 1.23%); ITC (down 0.93%) and Bharti Airtel (down 0.69%).

 

The top two A Group gainers on the BSE were—Reliance Communications (up 5.29%) and Oracle Financial Services Software (up 5%).

The top two A Group losers on the BSE were—Jain Irrigation (down 5.95%) and Cadila Healthcare (up 4.42%).

 

The top two B Group gainers on the BSE were—Rishiroop Rubber International (up 20%) and JRG Securities (up 20%).

The top two B Group losers on the BSE were—Splash Media and Infra (down 19.96%) and Vision Cinemas (down 19.91%).

 

Of the 50 stocks on the Nifty, 28 ended in the in the green. The main gainers were IL (up 2.79%); DLF (up 2.67%); ONGC (up 1.82%); Hindalco Ind (up 1.78%) and Sun Pharma (up 1.69%). The key losers were Ambuja Cement Company (down 1.72%); Infosys (down 1.32%); HDFC (down 1.31%); ACC (down 1.24%) and HCL Technologies (down 1.06%).

 

The market continued to trade sideways and settled with a marginal gain, snapping its three-day losing streak.

 

The Nifty gained four points to 5,924 and the Sensex closed at 19,568, up 22 points.

 

Markets across Asia settled lower after the Japanese prime minister’s plan to boost the economy failed to boost investor sentiment. Worries about the US Fed’s move to trim its stimulus initiative also added to the woes.

 

The Shanghai Composite shed 0.07%; the Hang Seng dropped 0.97%; the Jakarta Composite declined 0.41%; the KLSE Composite fell 0.13%; the Nikkei 225 tanked 3.83%; the Straits Times contracted 1.46%; the Seoul Composite lost 1.52% and the Taiwan Weighted settled 0.11% down.

 

At the time of writing, the key European markets wee in the red as investors reacted to services PMI data for various countries in the region. At the same time, US stock futures were lower, indicating a negative opening for US stocks later in the day.

 

Back home, foreign institutional investors were net buyers of stocks totalling Rs84.79 crore on Tuesday whereas domestic institutional investors were net sellers of shares aggregating Rs216.45 crore.

 

Ruchi Soya Industries, India’s leading food and agro-based FMCG player, has inked a joint venture with J-Oil Mills Inc and Toyota Tsusho Corporation (TTC), both from Japan. The move is aimed at launching a super premium edible oil brand in India.

 

Under the terms of agreement, a joint venture company would be formed soon by the probable name of Ruchi J-Oil in which Ruchi Soya would have a majority stake of 51%. While J-Oil, the technology partner in the joint venture, would have 26% stake with the remaining 23% proposed to rest with TTC. Ruchi Soya gained 2.31% to close at Rs68.60 on the NSE.

 

State-run Gujarat Industries Power Company (GIPCL) has issued letter of intent to Lanco Infratech for implementing a 600 MW lignite-based power project at Mangrol near Surat on engineering, procurement construction (EPC) basis. The project, which is an expansion of GIPCL’s existing lignite-based power project Surat Lignite Power Plant (SLPP), is expected to be commissioned by the third quarter of 2016-17. Lanco Infratech declined 1.10% to close at Rs8.95 on the NSE.

 

Tata Power today said funds have been tied up for the 135 MW Amakhala Emoyeni wind project worth over Rs2,262 crore in South Africa. The project of approximately Rand 3,945 million is being funded through a debt equity mix of 80:20. Tata Power rose 0.11% to close at Rs89.15 on the NSE.

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HSBC India services PMI up at 53.6 in May

The services sector which accounts around 60% of the India's GDP expanded largely driven by higher levels of new work placed at private sector firms in India, an HSBC survey said on Wednesday

India’s services sector activity expanded in May and the pace was the fastest in three months, driven by uptick in new orders, an HSBC survey said on Wednesday.

 

The HSBC/Markit purchasing managers’ index for the services industry inched up to 53.6 in May, pointing to a solid expansion in output, one that was the fastest in three months. It had registered 50.7 in April.

A reading above 50 shows expansion while a reading below 50 shows that the output in the sector is contracting.

 

The services sector which accounts around 60% of the India's GDP expanded largely driven by higher levels of new work placed at private sector firms in India.

 

“Service sector activity picked up pace in May led by firmer order flows. Moreover, companies were more optimistic about the domestic and global economic outlook,” HSBC chief economist for India & ASEAN Leif Eskesen said.

 

The level of positive sentiment was at a five-month high. Services firms expect that better economic conditions combined with increased marketing and the introduction of new services will lead to higher customer numbers.

 

The growth in the services sector contrasted with a fall registered in manufacturing output, the first decline in 50 months.

 

Earlier this week the HSBC/Markit manufacturing PMI showed that the manufacturing sector output fell in May, its first decline since March 2009, as order flow weakened and power outages affected the sector.

 

Accordingly, the HSBC India Composite Output Index, which maps both services and manufacturing activity, posted 52 in May, up from 50.5 in April.

 

“The latest reading signalled the fastest increase in business activity since February, but a rate of growth that remained historically muted,” HSBC said.

 

India’s economic growth rate slipped to a decade low of 5% in 2012-13 on account of poor performance of farm, manufacturing and mining sectors.

 

Eskesen further said that “notwithstanding the uptick in growth, inflation gauges eased further on the back of strong competition and moderating cost pressures. With growth still moderate and inflation softening, the probability of another RBI rate cut has increased.”

 

Meanwhile, overall employment growth across the Indian private sector was slight and unchanged from April. Slight rises were signalled in both the manufacturing and service sectors.

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