The RBI on Wednesday allowed banks to borrow additional amount from it under the Marginal Standing Facility, a new lending window which was opened by the central bank in the current fiscal. It further said that banks will not be required to seek waiver for default in SLR compliance
Mumbai: In order to ease the liquidity situation, the Reserve Bank of India (RBI) on Wednesday allowed banks to borrow additional amount from it under the Marginal Standing Facility (MSF), a new lending window which was opened by the central bank in the current fiscal, reports PTI.
“It has been decided to permit banks to avail themselves of funds from RBI on overnight basis, under MSF, against their excess Statutory Liquidity Ratio (SLR) holdings,” the RBI said in a circular.
MSF is the rate at which banks can borrow overnight from RBI. SLR refers to the amount which the banks are mandatorily required to invest in government securities. At present, the banks’ SLR is 24%.
RBI also said that banks can borrow funds on overnight basis below the stipulated SLR, up to 1% of their deposits.
It further said that banks will not be required to seek waiver for default in SLR compliance.
There is liquidity problem in the system following payment of third instalment of the advance taxes by the corporates and other assesses. The last date for payment of advance tax was 15th December.
Besides, the companies and traders will have to garner resources for payment of service tax. The last date for payment of half-yearly service tax is 26th December.
The RBI had opened the MSF window to allow banks to borrow money from central bank from 9th May.
The central bank in its mid-quarter credit policy announced earlier in the month had refrained from tinkering with the key rates and ratios despite the demand from the industry to lower the Cash Reserve Ratio (CRR), the amount which the banks are required to park with the central bank in cash. The CRR is currently at 6%.
Besides removal of levy sugar obligations, the industry has been demanding end of monthly release mechanism, under which food ministry fixes the quantity of sugar that mills can sell in the open market every month
New Delhi: Noting that the sugar industry would be the priority area after the Food Bill, food minister KV Thomas on Wednesday said the government will consider the demand for partial decontrol of the sector after Parliament session gets over, reports PTI.
The minister also said the government would consider further export of sugar at an “appropriate time”, which would be favourable for the industry. Last month, an export of one million tonnes was allowed under Open General License (OGL).
“There is a request from the industry as well as farming community that there are too many controls on the sector. One is levy sugar, which we allocate to States for distribution through ration shops.
“After this Parliament session, I will discuss the issue (removal of levy sugar system) with finance minister Pranab Mukherjee and agriculture minister Sharad Pawar,” Mr Thomas said on the sidelines of the AGM of Indian Sugar Mills Association.
At present, sugar mills are required to contribute 10% of their production to government (called levy sugar) for public distribution system (PDS) at a cheaper rate.
“We have committed to the states to provide sugar at subsidised price... After this session, we will have detailed discussion with the finance minister on how this can be reasonably resolved,” Mr Thomas said, adding that detailed discussion was required as this involved financial implications.
Making a demand for removal of levy sugar, ISMA president Narendra Murkumbi pointed out that the compulsion to supply 26 lakh tonnes of sugar for the PDS at a discounted rate causes losses of around Rs3,000 crore to the industry every year.
Addressing the function, Mr Thomas said the issue of decontrol involves a large number of stakeholders—farmers, mills, States and consumers—and a consensus needed to emerge on this issue.
Besides removal of levy sugar obligations, the industry has been demanding end of monthly release mechanism, under which food ministry fixes the quantity of sugar that mills can sell in the open market every month.
Expressing concern over cyclical nature of sugar industry he said there was a need to tackle this phenomenon through long-term solution.
Cairn India had made four discoveries in the Krishna Godavari basin block KG-DWN-98/2 and in 2005 wanted to sell 100% of its stake in the area to ONGC. But ONGC bought only 90% as it wanted to utilise Cairn India’s expertise and knowledge in exploiting the resource in the block
New Delhi: State-owned explorer Oil and Natural Gas Corporation (ONGC) today said it will buy 10% stake of Cairn India in a gas-discovery block that sits next to Reliance Industries’ prolific KG-D6 area in the Bay of Bengal, reports PTI.
“That (buying Cairn India’s 10% stake in Block KG-DWN-98/2) has been agreed in our last board meeting,” ONGC chairman and managing director Sudhir Vasudeva told reporters here.
Cairn India had made four discoveries in the Krishna Godavari basin block KG-DWN-98/2 and in 2005 wanted to sell 100% of its stake in the area to ONGC. But ONGC bought only 90% as it wanted to utilise Cairn India’s expertise and knowledge in exploiting the resource in the block.
But the two firms have not been on agreement on issues like the optimum way of developing the four pre-2005 discoveries and six subsequent finds.
Sources said there was a big gap in understanding of the resource with Cairn India feeling ONGC’s estimates of the blocks holding an in-place volume of 25.61 million tonnes of oil and 197 billion cubic metres of natural gas were grossly over-estimated.
It felt the large programme that ONGC was drawing was not justified and choose to exit the area.
Mr Vasudeva said ONGC will pay whatever past cost Cairn India had invested in the block as past cost. Cairn’s share of past cost comes to $47 million.
Cairn had some months back written to ONGC saying “the hither-to discovered oil and gas resources in the block are only marginal to non-commercial, because of their small size and the potential high development costs due to water depth versus the prevailing gas prices.”
ONGC proposes to invest over $7.3 billion to produce up to 30 million metric standard cubic metres per day (mmscmd) of gas.
Before selling 90% out of its 100% stake and giving away operatorship of the block, Cairn made four discoveries in the area—Padmavati, Kanakdurga, N-1 and R-1 (Annapurna).
Subsequently, ONGC made six significant discoveries—E-1, A1, U1, W1, D-1/KT-1 and the first ultra-deepwater discovery UD-1 at a record depth of 2,841 metres.
The block is divided into a Northern Discovery Area and Southern Discovery Area.
The NDA comprises discoveries like Padmawati, Kanadurga, D, E, U, A, while the ultra deepsea UD find lies in SDA.
Even ONGC has acknowledged that the NDA discoveries are small to marginal and cannot be developed on a standalone basis due to high deepwater development costs.
Accordingly, it is proposing to develop the discoveries in an integrated cluster.
Sources said the ONGC Declaration of Commerciality of NDA on 15 July 2010 was submitted without OC approval and so was the DOC of SDA on 21 December 2009.
The Directorate General Hydrocarbons (DGH), they said, wants a fresh proposal for DOC to be submitted by the operator after completion of the proposed appraisal drilling programme by 16 July 2013, in case of NDA and by 22 December 2012, in case of SDA, or by 16 July 2013, for both the NDA and SDA.