Banking and Financial News – 03 June 2014

Jaitley on ADB Board of Governors – Finance Minister Arun Jaitley has been appointed on the Board of Governors of the Philippines-based Asian Development Bank (ADB). The Board of Governors is ADB’s highest policy-making body and has one representative from each member country. (The Hindu)

RBI signals to government: cut the fiscal deficit – On 3 June 2014, RBI cut the SLR rate to 22.5%. RBI has also nudged up its economic growth estimates for this fiscal year to 5-6%. The cut in the statutory liquidity ratio (SLR) is a warning to the government: narrow the fiscal deficit or be prepared to pay higher interest rates for your borrowing. (liveMint)

India Pips Italy, Germany to Become Second Largest Textile Exporter - India has emerged as the second largest textile exporter in the world beating competitors like Italy, Germany and Bangladesh in calendar year 2013, with China retaining the top position, according to data released by UN Comtrade. (NDTV Profit)

Important Financial Terms in the News explained.

SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or unencumbered govt. / approved securities (Bonds) before providing credit to its customers in terms of Section 24 of Banking Regulation Act 1949. SLR is determined as the percentage of total demand and time liabilities. Present SLR is 23%. It is to be reduced to 22.5% from 15 June 2014. SLR rate is determined by RBI in order to control the expansion of bank credit. SLR is used to control inflation and propel growth. Through SLR rate tuning the money supply in the system can be controlled efficiently. The statutory maximum limit of SLR is 40%. No minimum. If any Indian bank fails to maintain the required level of SLR, then it becomes liable to pay penalty to RBI at 3% pa above the Bank Rate, on the shortfall amount for that particular day.

A successful man is one who can lay a firm foundation with the bricks others have thrown at him. ~ David Brinkley

Courtesy : The Hindu , liveMint , NDTV Profit