Reserve Bank of India will allow banks to unlock their corporate bonds for cash

To ease the liquidity crunch, the Reserve Bank of India and the Finance Ministry will soon allow banks to avail of a refinance facility by depositing their corporate bond holdings as collateral.

The proposal, pushed by some state-owned and private sector banks, was discussed recently by the government and the RBI. A favourable view has been taken,a government official told The Indian Express.

As on March 31, 2008, total bank investment in corporate bonds is estimated to be about Rs 80,000 crore. State-owned and private sector companies issue interest-bear ing bonds to raise funds and these are subscribed by banks, mutual funds, insurance companies, NBFCs, etc.

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Why falling crude oil is hope rising

It may be gloom, doom and bust on Dalal Street this Diwali as the economy braces itself for a “cloudy” growth outlook and the Finance Ministry admits that fiscal deficit targets for this year won’t be met. But if there is one silver lining and for India, Asia’s third largest economy, a bold one at that it is the dramatic fall in global crude oil prices from nearly $150 a barrel this June to $56 now.

This slide in crude oil presents Prime Minister Manmohan Singh and his lieutenants a significant fiscal headroom to pump-prime the economy and risk some adventure in big-ticket infrastructure spending, both social and physical. Besides, it also helps the rupee hold on to its own because of lesser demand for dollars by oil refiners. Last, but not the least, it douses inflationary expectations, giving the government and the Reserve Bank of India more leeway in lowering lending rates and infusing more liquidity into the system to spur growth.

India imports almost 70 per cent of its fuel needs, and oil is the biggest item. In 2007-08, it imported 121.672 million tones of crude oil and the bill was a staggering $68 billion.

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Holi gift? Pay Panel for 42% hike in Central staff salaries

The festive season this weekend will bring extra cheer to 55 lakh Central government employees as the Sixth Pay Commission is likely to recommend an increase of up to 42% in their salaries and pensions when it submits its report on Thursday.

While the number of salary grades will be pruned to 18 from the existing 33, the basic salary proposed is 35 to 42% higher than what each employee currently gets, inclusive of dearness pay and dearness allowance.

The house rent allowance will become city specific with those living in metros getting the full 30% of the basic salary. But for other towns, the HRA could be capped at 15% of the basic salary.

The commission is also expected to recommend the delinking of pay from post so that an employee would get higher scale at fixed time intervals. That is,he need not await his promotion to become eligible for the next salary grade.

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