ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles By RBI

Non-performing Loan Auctions

Relying on established theories in auction literature, the lacunae in the design of auction mechanism used by the banks are identifi ed. The choice of security used for the payment of the bid amount, the proportional distribution between upfront cash and debt issued by the bidder, and the priority of the bidder’s payment are evaluated. Banks should review the choice of security used in the contingent payment auction mechanism and the policy to make cash component a predefi ned portion of the aggregate bid. It is advisable to review the payment priority of asset reconstruction companies and the proportion of cash in the aggregate bid undertaken, to improve ultimate recovery from auctioned NPLs.

Central Bank Digital Currency - The ‘digital rupee’ in India

Central Bank Digital Currency (CBDC) is a digital counterpart of government-backed fiat money. This kind of digital currency is connected to the nation's currency and issued by its central bank. The same would be the case with the ‘digital rupee’ in India as it will be backed by the central bank of India, i.e. RBI. The development of CBDCs is underway in more than 100 nations across the world, and it is in various phases. Some countries have already released their digital currencies, while some have abandoned or stopped working on their initiatives. Despite being strongly inspired by bitcoins, the idea of CBDCs differs from decentralised virtual currencies and crypto assets, which are not issued by the government and do not have the status of "legal tender." With the rising demand for cryptocurrencies, there is a rise in the government's concerns about the risks associated with the same and its tendency to facilitate money laundering and other forms of criminal financing, and thus the concept of CBDC is gaining momentum. Even though the RBI supports the growth of virtual and online currencies, it does not support ones like bitcoin because it is impossible to monitor their end-use. It is preferred to introduce CBDC in order to track end-to-end virtual currency usage. The article sheds light on what digital currency is, how it differs from cryptocurrencies, why it has had such a surge in popularity recently, as well as the problems and risks that come with using it.

Political Aspects of ‘Freebies’

The attempts to disparate the state governments’ expenditure on subsidies by the votaries of the neo-liberal fiscal regime, do not stand the scrutiny of facts and reason. The use of terms like “freebies” and “revadi culture” is an assault by the state-capital nexus on the lives of millions of working people, by keeping them vulnerable in order to discipline them, as an integral part of the neo-liberal agenda.

Investment Behaviour in India

Most of the investment slowdown debates have been around aggregate investment but disaggregate investment institution- and assets-wise may respond heterogeneously with respect to the macroprudential policy measures. The present study explores the investment dynamics at disaggregate level for 2004–19 in the wake of changing economic environment characterised by active utilisation of monetary and fiscal policies, varying monetary transmission effect, economic uncertainty, business environment, and financial pressures either by credit shortfall or debt overhang.

Words That Send Waves to the Indian Stock Market

The study draws attention to the Reserve Bank of India’s communication as a policy tool and its impact on market participants. It first aims to quantify the qualitative variable—communication by employing textual analysis methods. The investigation starts by extracting the tone of monetary policy statements and trace its transmission on market sentiment in the presence of various informational, macroeconomic, and financial controls. The work concludes that market participants draw inferences from the tone of the RBI’s monetary policy statement and update their information set about the present state and prospects. 

Bank-like Regulations for Non-banking Financial Companies

The purpose of this article is to address some of the lacunae in the scale-based framework proposed by the Reserve Bank of India in a discussion paper on non-banking financial companies that have turned a blind eye to the growth aspect and recognising only the stability by minimising the possibility of systemic risk. In this context, the introduction of pyramid-based structure of NBFCs is found to be lacking a common parameter for classification of companies in different layers. Further, the revision of threshold asset size limit for identifying systemically important non-deposit taking NBFCs from `500 crore to `1,000 crore is found be undervalued, which will result into making the smaller asset sized NBFCs subject to stricter prudential norms.