US Secretary of State John Kerry said that India and eight other nations have qualified for an exception to sanctions under America's Iran Sanctions Act, based on additional significant reductions in the volume of their crude oil purchases from Iran
United States on Thursday exempted India and eight other countries from sanctions for importing oil from Iran, as these countries have significantly reduced their dependence on Iranian oil in the last six months.
US Secretary of State John Kerry said that India, China, Malaysia, Republic of Korea, Singapore, South Africa, Sri Lanka, Turkey, and Taiwan have qualified for an exception to sanctions under America's Iran Sanctions Act, based on additional significant reductions in the volume of their crude oil purchases from Iran or for reducing those purchases to zero and remaining there.
United States and the international community stand shoulder to shoulder in maintaining pressure on Iran until it fully addresses concerns about its nuclear program, Kerry said in a statement.
“Today's determination is another example of the international community’s strong and steady commitment to convince Iran to meet its international obligations,” Kerry said.
“This determination takes place against the backdrop of other recent actions the administration has taken to increase pressure on Iran, including the issuance of a new Executive Order on 3rd June. The message to the Iranian regime from the international community is clear: take concrete actions to satisfy the concerns of the international community, or face increasing isolation and pressure,” Kerry said today.
Meanwhile, White House Press Secretary Jay Carney said that it appears that there is sufficient supply of non-Iranian oil to permit foreign countries to significantly reduce their purchases of Iranian oil.
“In this context, it is notable that many purchasers of Iranian crude oil have reduced or ceased altogether their purchases from Iran,” he said.
However, he noted that global oil consumption has exceeded production in recent months.
“The international response to concerns about Iran's nuclear activities has increased demand for non-Iranian crude.
“However, rising production from other countries, greater spare production capacity, economic developments, and smaller inventory draws in March and April 2013 indicate a looser international crude market,” Carney said.
The Obama administration has introduced a series of measures over the past week to step up the pressure on Iran over its nuclear program, which Washington suspects is aimed at making weapons but Iran insists is for generating electricity and medical research.
Washington hopes the pressure will force Iran to come clean on its nuclear activity so that the US and its allies can avoid any military intervention to prevent the Islamic republic from obtaining an atomic arsenal.
Despite plummeting sales overseas, Iran remains one of the world's largest oil producers. Its exports bring in tens of billions of dollars in revenue for the country.
While consumer organizations are demanding that bank deposits should be insured for a much higher limit, the RBI Deputy Governor pointed out in a Moneylife Foundation event that the costs of much higher deposit insurance will be onerous on depositors themselves. It will also allow promoters of shady cooperative banks to get away
On Monday, 3rd June, Dr KC Chakrabarty, Deputy Governor of the Reserve Bank of India (RBI) interacted with various stakeholders in an open house session organized by Moneylife Foundation. One of the issues discussed was deposit insurance. Under the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, if a bank becomes insolvent, its depositors are paid up to a maximum of Rs1 lakh. Banks have to pay an insurance premium up to a maximum of Rs0.15 per Rs100 of insured deposits to DICGC every year to avail of the deposit insurance cover. Consumer organizations have been demanding, without much application of mind, that this be changed to ensure a much higher protection for depositors.
Vasundhara Deodhar, of the Mumbai Grahak Panchayat, a 35-year old organization enjoying the membership of over 28,000 families argued that depositors should be fully insured under the DICGC. She said “Depositors are the pillars of the banking system. Each and every rupee of theirs should be safe with the bank.” The Damodaran Committee in its report on customer services had recommended in 2010 that that the insurance amount be raised to Rs5 lakh from Rs1 lakh and that the government should also consider the possibility of insuring the entire deposit. Last month, the All India Bank Depositors Association (AIBDA) had also asked the RBI to increase the amount on the grounds that once Rs1 lakh was adjusted to 1993-94 prices (at an average inflation rate of 6.5% p.a.), it reduced to a mere Rs 33,000.
Reacting to these demands Dr KC Chakrabarty replied that no insurance company works by meeting claims with capital from its own pocket. He said “Nowhere in the world is there unlimited deposit insurance. If you do want that, premium will become so high that you will have to pay the bank even to keep your money.”
There is another peculiarly Indian problem with raising deposit insurance. Moneylife Foundation’s long-held stand on the issue of deposit insurance has been to oppose any measures to increase deposit guarantee under DICGC. The rationale for this is that only poorly managed, politically-controlled cooperative banks benefit from this while the cost of higher insurance premia are borne by depositors who invest smartly in safe, well-established banks.
DICGC has paid out a massive Rs1,025 crore in claims over the last three years alone to 83 banks, all of which were co-operative banks. While close to a 100% of payments have been made to co-operative banks, less than 8% of the total premium is raised from the 2,080 co-operative banks under DICGC, with about 88% coming in from less than 200 commercial banks.
Moneylife Foundation believes that before any move is made to raise the insurance cover, the dual regulation of cooperative banks under the Registrar of Cooperative Societies (RoCS) and the RBI needs to be addressed; RBI ought to be the sole regulator of all banks. Alternatively, co-operative banks should be given a separate insurance cover, funded only by premia collected from depositors in co-operative banks.
Ashok Ravat, from the All India Bank Depositors Association (AIBDA) raised the issue that bank depositors also need to be protected against inflation. He demanded that the RBI formulate a policy that ensures depositors a positive real interest rate, i.e., interest rates guaranteed by banks should be inflation adjusted. AIBDA holds that small depositors up to Rs1 lakh and senior citizens with deposits up to Rs15 lakh should be fully insured under DICGC.
In response to this Dr Chakrabarty said while he agreed with Mr Ravat, but that the RBI was constantly receiving flak for keeping interest rates high. He indicated that the RBI had to balance out the interests of savers with those of borrows who would stand to benefit from lower interest rates. He said “Now hopefully inflation will come down and you will get positive returns on your deposits, but on this one count you must give some credit to the (RBI) Governor. He is fighting relentlessly that interest rates should not be brought down until inflation comes down."
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.