In a move that should make mortgages, auto loans and other borrowings cheaper, Reserve Bank of India cut interest rates by 25 basis points for the third time this year and hinted at more cuts by changing its policy stance from “neutral” to “accommodative”. Emboldened by benign inflation and availability of buffer foodgrain stock, the central bank’s monetary policy committee (MPC) voted unanimously to bring down the repo rate from 6% to 5.75% - the lowest since September 2010. Repo rate is the price commercial banks pay to the RBI for short term funds. Announcing the MPC decision, RBI governor Shaktikanta Das said, “Growth impulses had weakened significantly. A sharp slowdown in investment activity, along with a continuing moderation in private consumption growth, is a matter of concern.” He added that the fact that the bank’s stance was changed to accommodative meant that rate hikes were off the table for now. Responding to comments that the earlier two rate cuts were not passed on, Das said banks have passed on 21 basis points through a reduction in lending rate.
Withdrawal of LOC against Chanda Kochhar's brother-in-law ordered
A Delhi court has directed the authorities to withdraw the look out circular (LOC) against Rajiv Kochhar, brother-in-law of former ICICI Bank CEO Chanda Kochhar, in an alleged bank loan fraud and money laundering case. Special Judge Anju Bajaj Chandna allowed Rajiv, a non-resident Indian, to return to Singapore where he is currently based. However, taking note of the submissions made by Enforcement Directorate's (ED) special public prosecutor, Nitesh Rana, the court imposed various conditions on the accused. Rajiv will leave the country only after furnishing a fresh itinerary and giving his address in Singapore, contact numbers and e-mail. He was also asked to submit photocopies of his passport and bank accounts in India, and to inform ED about his travels outside Singapore.
RBI fines Kotak Bank £200,000
The Reserve Bank of India has imposed a £200,000 penalty on Uday-Kotak-led Kotak Mahindra Bank for non-compliance with the directions issued to dilute promoter holding by December 2018. The RBI said that Kotak Bank was directed to furnish information about details of the shareholding held by its promoters and to submit details of the proposed course of action of the bank for complying with the permitted timeline for dilution of promoter shareholding. “Subsequently, the bank was directed to convey its commitment to achieve the dilution as per the timelines stipulated. However, the bank failed to comply with the said directions and a show-cause notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the said directions,” the RBI said.