RBI on demonetisation, decline in currency in circulation and surplus liquidity with banks

Newsroom24x7 Network

Mumbai: Buoyed by festival demand and a bumper kharif harvest, a renewed pick-up in Currency in Circulation (CiC) was beginning to form in Q3-2016-17 when demonetisation abruptly stifled it.

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Underscoring this point with regard to the trickling down of CIC in the aftermath of demonetisation, the Reserve Bank of India Annual Report 2016-17 states that over the first seven months of 2016-17, the behaviour of reserve money (RM) was largely conditioned by the stance of liquidity management–the Reserve Bank’s resolve in its April 2016 bimonthly policy statement of progressively moving ex ante liquidity in the system towards neutrality. In terms of components, currency in circulation (CIC) rose sharply in Q1 but fell back in Q2, reflecting the usual seasonality.

Demonetisation, according ot RBI imposed a compression on the level and path of RM. Following the withdrawal of legal tender status of specified bank notes (SBNs) on November 9, 2016, CIC fell precipitously to a low of Rs 9 trillion on January 6, 2017 (around 50 per cent of the peak), a level seen more than six years ago. While banks’ vault cash shot up in the immediate aftermath, it quickly dropped as the Reserve Bank mounted unprecedented liquidity absorption operations to mop up the massive influx of liquidity as SBNs were returned by the public. As a result of these large changes, a downward spiral in RM took it down to Rs 13.8 trillion (61 per cent of the peak) by January 6, 2017.

On November 4, 2016, CIC had scaled an all-time high of Rs 18 trillion taking RM to a peak of Rs 22.5 trillion. During this seven-month period, bankers’ balances with the Reserve Bank – the other component of RM – unwound from the usual balance sheet related build up at the end of March 2016 and banks generally economised on their holdings of excess reserves in view of the Reserve Bank’s liquidity provision operations in consonance with its stance including the reduction in daily maintenance requirements with respect to
the cash reserve ratio (CRR) from 95 per cent to 90 per cent.

The volume of notes in circulation continued to increase till November 8, 2016 when the Government of India notified that banknotes of Rs 500 and Rs 1000 denominations of the existing series issued by the Reserve Bank of India till then (henceforth, specified bank notes), shall cease to be legal tender with effect from November 9, 2016 (also termed as demonetisation).

After demonetisation, currency in circulation declined by about Rs 8,997 billion (up to January 6, 2017), which resulted in a large increase in surplus liquidity with the banking system, equivalent to a cut in the CRR by about 9 per cent. This, in turn, posed a formidable challenge to the Reserve Bank’s liquidity management operations.

Initially, conventional instruments, especially reverse repo auctions under the liquidity adjustment facility (LAF) window, were deployed to absorb surplus liquidity. Recognising, however, that these operations could potentially be constrained by the finite stock of domestic securities available with the Reserve Bank, a pre-emptive strategy was put in place.

With the withdrawal of the legal tender status of Rs 500 and Rs 1,000 denomination bank notes was a surge in deposits relative to the expansion in bank credit, leading to large excess liquidity in the system. The magnitude of surplus liquidity available with the banking system increased further in the fortnights ahead. In view of this, it was decided to absorb a part of this surplus liquidity by applying an incremental cash reserve ratio (CRR) as a purely temporary measure, as under:

The CRR remained unchanged at 4 per cent of outstanding net demand and time liabilities (NDTL)

On the increase in NDTL between September 16, 2016 and November 11, 2016, scheduled banks were required to maintain an incremental CRR of 100 per cent, effective the fortnight beginning November 26, 2016. This was intended to absorb a part of the surplus liquidity arising from the return of SBNs to the banking system, while leaving adequate liquidity with banks to meet the credit needs of the productive sectors of the economy.

The Reserve Bank separately revived the Guarantee Scheme to enable deposit of SBN balances at the Reserve Bank or at currency chests and get immediate value.

Currency management during 2016-17 was geared towards managing the process of demonetisation of specified bank notes effected in early November 2016 and the subsequent remonetisation by making available adequate quantity of banknotes to meet the legitimate demand of the public in the shortest possible time.

Hence sustained efforts continued to be made towards indigenisation of banknotes production with sophisticated security features.

Simultaneously, a new series (Mahatma Gandhi New Series) of banknotes of a different size and design, highlighting the cultural heritage and scientific achievements of the country, was introduced.

In view of the withdrawal of legal tender character of nearly 86 per cent of value of notes in circulation on November 8, 2016, the focus of the Reserve Bank subsequently shifted to making available banknotes generated from printing presses to currency chests and from there to bank branches and ATMs in the shortest possible time.

This process was facilitated by air lifting of notes as also direct remittances from the presses to currency chests wherever feasible and adopting a hub and spoke model of distribution. As a result, during a short span from November 9 to December 31, 2016, the Reserve Bank pumped in 23.8 billion pieces of bank notes into circulation aggregating Rs. 5,540 billion in value.

The pace of remonetisation continued ceaselessly thereafter also and the notes in circulation (NiC) as on March 31, 2017 increased close to 74 per cent of the NiC prevailing on November 4, 2016.

Sustained efforts were made towards indigenisation of banknotes production along with enhanced security features during the year. The Bank Note Paper Mill at Mysuru started commercial production. Efforts towards a greenfield project for production of security inks were also undertaken.

Banknotes in Circulation

The value of banknotes in circulation declined by 20.2 per cent over the year to Rs 13,102 billion as at end-March 2017. The volume of banknotes, however, increased by 11.1 per cent, mainly due to higher infusion of banknotes of lower denomination in circulation following the demonetisation. In value terms, the share of Rs 500 and above banknotes, which had together accounted for 86.4 per cent of the total value of banknotes in circulation at end-March 2016, stood at 73.4 per cent at end-March 2017. The share of newly introduced Rs 2000 banknotes in the total value of banknotes in circulation was 50.2 per cent at end-March 2017. In volume terms, Rs 10 and Rs 100 banknotes constituted 62.0 per cent of total banknotes in circulation at end-March 2017 as compared with 53.0 per cent at end-March 2016.

Predominantly driven down by the compression in currency in circulation, reserve money contracted during 2016-17 while the growth of money supply moderated, despite the surge in deposits.

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Besides demonetisation, intra-year spikes in deposits growth were caused by mobilisation under the Income Declaration Scheme (IDS) and arrears of the 7th CPC to central government employees. The surge in deposits led to excess liquidity in the banking system which was absorbed through an array of liquidity management measures, viz., reverse repo under the Liquidity Adjustment Facility (LAF), incremental Cash Reserve Ratio (CRR), and issuance of Cash Management Bills (CMBs) under the Market Stabilisation Scheme (MSS). Credit growth touched a low in more than two decades on account of factors such as subdued state of economic activity, risk aversion of the banking sector, capital adequacy requirements, loan write-offs, substitution of bank credit by UDAY bonds, loan repayment by use of specified bank notes (SBNs) and banks’ pre-occupation with exchange of notes and deposits following demonetisation. As the pace of remonetisation gathered momentum, monetary aggregates started recovering with currency in circulation as of end-June 2017 reaching around 85 per cent of its pre-demonetisation peak.

Delhi High Court quashes 1997 GoI order to continue reservation in promotion for SCs/STs

Newsroom24x7 Staff

New Delhi: In a landmark judgement passed on 23 August 2017, the High Court of Delhi has quashed and set aside an Office Memorandum (OM) issued by the Department of Personnel and Training on 13 August, 1997 asking all ministries, departments, their subordinate offices, public sector undertakings and statutory bodies to continue the reservation in promotion for the Scheduled Castes and the Scheduled Tribes in the service posts under the Central Government beyond 15 November 1997 till such time as the representation of each of the above two categories in each reaches the prescribed percentage of reservation where after the reservation in promotion shall continue to maintain the representation to the extent of prescribed percentages for the respective categories in pursuance of Article 16(4A).

The judgement by a two judge Bench, comprising the acting Chief Justice and Justice C. Hari Shankar has come in response to a petition by the All India Equality Forum and others versus the Union of India.

The High Court order underscores that the Central Government in its counter affidavit did not disclose that the requisite exercise of collecting quantifiable data and determining the aspects of backwardness, inadequacy of representation and overall efficiency of the administration was ever undertaken before blindly extending the provision for reservation, in promotion, favouring SCs and STs.

The 77th Amendment to the Constitution, and sub-article (4A), which was inserted in Article 16 thereby, were obviously taken as providing a carte blanche to the Government to extend the provisions of reservation for SCs and STs beyond the period of 5 years stipulated in Indra Sawhney, the order says.

The order goes on to point out that the decision in the M Nagaraj case and the decisions following thereupon show that is not the case. Any reservation (as also consequential seniority) extended to SCs and STs, without, in the first instance, conducting the requisite exercise of garnering quantifiable data, indicating inadequate representation, and juxtaposing, they’re against, the considerations of backwardness and overall efficiency of administration, would necessarily infract Articles 16 (1) and 335 of the Constitution of India and, consequently, be liable to be quashed.

The impugned OM of 13 August 1997 (No.36012/18/95-Estt./(RES) Pt.II), issued by the DOPT cannot, therefore, sustain in view of the law laid down

The High Court has restrained the Government from granting any reservation, in promotion, to Scheduled Castes or Scheduled Tribes, in exercise of the power conferred by Article 16 (4A) of the Constitution of India, without, in the first instance, carrying out the necessary preliminary exercise of acquiring quantifiable data indicating inadequacy of representation, of the said categories, in service, and evaluating the situation by taking into consideration the said data, along with the competing considerations of backwardness and overall efficiency in administration, and arriving at an empirical decision on the basis thereof.

The Delhi HIgh Court order also says that the prayer by the petitioner exhorting the court to quash all promotions made in pursuance of the impugned OM of 13 August 1997, would stand satisified by the interim order, stated to have been passed by the Supreme Court, in, inter alia, WP (C) 413 of 1997 (M Nagraj case), to the effect that all promotions made would be subject to the outcome of the challenge laid by the petitioners in the instant case. No further orders would, therefore, require to be passed regarding this prayer which would, consequently, also stand allowed, to the extent that all promotions effected on the basis of the impugned OM, of 13 August, 1997, that stands quashed.

On further prayer, in the writ petition, that “the employees of general category be given benefit of promotion retrospectively from the date reserved category employees were promoted illegally” the Order says that it cannot be granted for the simple reason that promotion may be dependent on a variety of factors, including seniority, eligibility, qualifying service, availability of vacancies, application of the quota-rota principle, and the like, and, in the absence of any specific prayer qua any specific post, an omnibus direction, to promote all “employees of general category”, retrospectively, “from the date reserved category employees were promoted illegally”, cannot possibly be issued. All that we can say, on this prayer of the petitioner, is that, if, consequent on this judgement, any general category employee becomes entitled to promotion against a post against which an SC or ST candidate was promoted on the basis of the impugned OM dated 13th August 1997, it shall be open to such general category candidate/candidates to represent to the concerned administrative authorities, or to independently seek her, or his, judicial remedies in that regard. Liberty, to the said extent is, therefore, granted.

“The Art of Weddings’ across India: A Radisson BLU initiative

Newsroom24x7 Business Desk

India is a very important market for us where we are committed to strengthening our brand presence. The ‘Art of Weddings’ taps on the huge potential of the wedding market in India and is unique in its targeting, delivery and reach. The campaign is designed to create personalised wedding experiences and we are confident that the campaign will resonate strongly with consumers in the country. -Sandy Russell, vice president, commercial operations, Asia Pacific, Carlson Rezidor Hotel Group

Indore: ‘The Art of Weddings’, a campaign created exclusively for the India market, is being launched by Radisson Blu, the iconic hotel brand driven by innovation and design.

‘The Art of Weddings’ campaign that will run across all of India’s 34 Radisson Blu hotels – will revolve around the brand’s global ‘Something Blu, A Wedding of a Kind’ concept.

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The event is aimed at establishing the upper-upscale brand as the venue of choice for weddings and bridal related events, ‘The Art of Weddings’ is targeted at new age Indian couples and brings together the finest names in wedding services uo-for a truly elegant, stylish and sophisticated wedding experience. Special privileges such as food and beverage discounts and a bonus of 25,000 Club CarlsonSM Gold Points, will be extended to all wedding bookings made at Radisson Blu hotels across India during the campaign period.

‘The Art of Weddings’ rolled out in the form of a two-day lavish experiential ‘Wedding Fair’ at Radisson Blu Hotel New Delhi Paschim Vihar on August 25 and 26.

The grand event will be held at Radisson Blu Hotel Indore on September 2 and 3. Partnering with the campaign are – India’s finest couture designer, Payal Singhal, who will present ‘The Azure Collection’, an exclusive line designed for Radisson Blu; renowned celebrity chef from Radisson Blu, Rakesh Sethi and his specially curated signature dishes; Ramit Batra, acclaimed destination wedding photographer and storyteller, who ties together vibrant and colourful memories of weddings through his photography; Puneet Gupta and his fashionable, bespoke wedding invitation designs; Jewels D’Allure that will bring together personalised, high-end jewellery and Eclairs Cakes; a specialist in designer wedding cakes. Leading make-up artist Kangana Kochhar will also participate in the New Delhi Fair to help would-be brides look their best on their special day.

Bespoke wedding packages include Silver and Gold Tier options with highlights such as signature dishes by Rakesh Sethi, a complimentary upgrade to Club Carlson SMSilver/Gold status and exclusive offers with local sari houses, jewellers and florists. Couples who book a wedding at either Radisson Blu Hotel New Delhi Paschim Vihar or Radisson Blu Indore Hotel during the ‘Fairs’ also stand a chance to win specially crafted Payal Singhal outfits worth INR 50,000 each.

 

Experiential workshops are also a key feature at the ‘Wedding Fairs’. Attendees will learn how to create an unforgettable destination wedding, select an ideal wedding invitation, trousseau and other gift packing techniques and latest trends, styles and flavours in the world of wedding cakes and much more. An exclusive session with Payal Singhal on a bride’s trousseau is also open for first 20 registrations in each city.

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Raj Rana, chief executive officer, South Asia, Carlson Rezidor Hotel Group said, “We are excited to launch The Art of Weddings in India where we have Radisson Blu hotels located in primary and secondary cities. We believe that Radisson Blu with its service philosophy of ‘Yes I Can!SM is uniquely positioned to deliver a one-stopdestinationforallweddingneeds of the Indian consumer. By introducing this campaign across all Radisson Blu hotels in India at one-go, we have ensured an inclusive, consistent and seamless experience for all guests looking to book their special occasion with us and we hope to leverage our strong brand presence across the country to maximise guest service.”


Entrance is free and open to the public at the ‘Wedding Fair’. For additional information on ‘The Art of Weddings’, please visit:
Website: http://www.artofweddings.in/home/
Facebook:https://www.facebook.com/artofweddingsIndia/
Instagram: https://www.instagram.com/artofweddingsindia/

About Radisson Blu®
Radisson Blu® is one of the world’s leading hotel brands with 300 hotels in operation in 69 countries and territories.

Radisson Blu is a part of Carlson Rezidor Hotel Group, which also includes Quorvus Collection, Radisson®, Radisson RED, Park Plaza®, Park Inn® by Radisson and Country Inns & Suites By CarlsonSM.

 

Looking for office space in Indore – Go grab it at Bhadaas Café

Newsroom24x7 Business desk

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Get in touch with us at Bhadas Café, 27-A, Chandra Nagar, near Syndicate Bank, MR-9, Indore. To explore all about the workspace solution, just pick you handset and contact Atul Malikram at +919755020247. Simple -isn’t it?