The Reserve Bank of India (RBI) mandated Non-Banking Financial Companies (NBFCs) to ensure that at least 25% of their borrowings come from the capital market instruments. This regulation is part of the RBI’s ongoing efforts to enhance the financial stability and risk management practices within the NBFC sector.
- Capital market instruments include commercial papers, non-convertible debentures (NCDs), external commercial borrowings (ECBs), among others.
Reason behind this move:
NBFCs have higher share of bank borrowing. In November 2023, RBI increased the risk weight on bank loans to NBFCs by 25% for cases where the risk weight based on external ratings was below 100%. This change led to a sharp slowdown in bank loans to NBFCs.
- According to the RBI’s latest data, bank loans to NBFCs grew by 12% year-on-year (y-o-y) to Rs 15.22 lakh crore as of August 23, 2024 as compared to 21% y-o-y growth observed in the same period in 2023.
- The RBI’s move aims to promote a more diversified funding structure for NBFCs, reducing systemic risks associated with concentrated borrowing sources.
Interest rate on GOI Floating Rate Bond 2034 set at 7.53% for next 6months
RBI has announced that the interest rate for the Government of India Floating Rate Bond 2034 (GOI FRB 2034) will be 7.53% per annum for the upcoming six-month period, from October 30, 2024, to April 29, 2025.
- This rate is determined based on the average yield of the last three auctions of 182-day Treasury Bills, plus a fixed spread of 0.98%.
RBI’s gold reserves rise to 855 metric tonnes; 60 pc stored domestically
RBI has reported a significant increase in its gold reserves, which now total 854.73 metric tonnes as of the end of September 2024. Of this amount, 510.46 metric tonnes, or approximately 60%, is stored domestically within India.
- This marks a notable rise from 50% held domestically in March 2024.
- RBI recently on October 2024, relocated 102 tonnes of gold from the Bank of England’s vaults
Key Points:
i.The remaining gold reserves include 324.01 metric tonnes held in safe custody at international institutions such as the Bank of England and the Bank for International Settlements (BIS).
Additionally, the RBI maintains 20.26 metric tonnes of gold in the form of deposits to enhance liquidity and financial stability.
ii.In terms of value, gold now constitutes 9.32% of India’s total foreign exchange reserves, up from 8.15% at the end of March 2024.
Recent Related News:
i.RBI’s Digital Payments Index (RBI-DPI) increased to 445.5 at the end of March 2024, marking a 12.6% Year-on-Year (Y-o-Y) increase compared to March 2023 across all parameters. It was 418.77 in September 2023 and 395.57 in March 2023.
ii.RBI has released its ‘Report on Currency and Finance (RCF) for 2023-
24’ on 29th July 2024. The report highlights the challenges that an economy faces by the rapid adoption of digital technologies in the financial sector. The theme for the RCF 2023-24 report is “India’s Digital Revolution”.
About Reserve Bank of India (RBI):
Governor – Shaktikanta Das
Deputy Governors – Swaminathan Janakiraman, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar
Establishment– 1st April 1935
Headquarters– Mumbai, Maharashtra
