BREAKING NEWS ""****1st Wage Revision meeting of 11th BP was held on 2-05-2017 T- Tuesday See details outcome. post date 04.05.2017 **********11th BP charter of demand posted 20.09.2016***DA FOR BANK EMPLOYEES FROM FEBRUARY 2017 TO APRIL 2017 0.9% decrease*****Penalty awaits those accepting cash in excess of Rs. 3 lakh and above in any transaction*****INCOME TAX CHART FY 2017-2018******Out of 2.15 lakh ATM in India only 40000 ATM in Rural Are --- HOw the problem solve- blog post date 26.11.2016*****Goods and Services Tax (GST) – What is it and how would it affect Business activity in India ----must read post date 05.08.16****"Bank Merger List finalized in Ministry of Finance See mega list where you are?????******Aug 2016 DA increased 35 slab (3.50%) ie 455 @ 45.50% For Pensioners increase 29 slab****BANK MERGER FINALIZED SEE MERGER LIST OF INDIAN BANK*****Expected DA for MAY 2016 – Bank Employees posted 14.03.2016"****Income Tax Slabs and Rates for FY 2015-16 and AY 2016-17**"Basic comparision Bank Staff vs Lic employee ....See where the Bankers stand.......""****11thbiprite.blogspot.com created inside my main blog please visit for latest 11th BP news first"*****New DA FORM FEB 2016 WILL BE 43% for bank employee****PAN for cash transactions over Rs 2 lakh mandatorys****Comparison of Salary of Bank Staff and Central Govt Staff post 7th CPC must read must read ***** Government Plans to Privatize IDBI Bank: Jayant Sinha*** ****Three Bank may be forced to look at a merger in 1st stage*****Indian Overseas Bank and Bank of India look particularly weak-report by Moody's Investors Service************""

Tuesday, May 23, 2017

RBI defies Supreme Court order, refuses to disclose list of loan defaulters



The Reserve of (RBI) has refused to make public the list of loan defaulters with public sector despite an order of the Supreme in 2015 to make this information public.

The case relates to an application filed by activist who had sought to know the list of people who had defaulted in the loan of Rs one crore and above.


According to the government, gross non-performing assets (NPA) of the public sector stood at Rs 6.06 lakh crore as on December 31, 2016.

had denied information citing clauses of economic interests of the state, the commercial confidence and information held in fiduciary capacity.

It had also cited the provisions of Section 45-E of the Act, 1934 which prohibits disclosure of credit information.

On December 16, 2015 the apex had clearly rejected these arguments of the RBI, in a matter filed by another applicant, and ordered disclosure of defaulters' list, upholding a Central Information Commission (CIC) order.

Still, the Bankers' cited same arguments to deny information to Agrawal, who escalated the matter to the CIC.

During the hearing, also said the Supreme is hearing a matter in which reports have been sought in a sealed envelop and hence any decision should be avoided.

A two-member CIC bench gave reprieve to the as it agreed to not pass any order till the pending matter, where disclosure of defaulters having dues of over Rs 500 crore towards the banks, was decided by the apex 

The bench, comprising Information Commissioners Manjula Prasher and Sudhir Bhargava, did not accept Agarwal's plea that a case was already decided by the Supreme in which clear directives have been given and is a law of land, and not a pending case.

In 2015, apex had stated that is supposed to uphold public interest and not the interest of individual 

The is clearly not in any fiduciary relationship with any bank, it had said.

"The has a statutory duty to uphold the interest of the public at large, the depositors, the country's economy and banking sector," it had said while directing the to disclose the list of defaulters.

The had said that the is duty bound to comply with the provisions of the Act.

"The baseless and unsubstantiated argument of that the disclosure would hurt economic interest of the country is totally misconceived," the had said.

The apex had said facts reveal that were trying to cover up their underhand actions, they are even more liable to be subjected to public scrutiny.

It had passed the order of disclosure after hearing arguments of which had sought refuge under Section 45E of Reserve of Act, 1934 which says disclosure of any information relating to credit information submitted by banking company is confidential.

It had said the Act, 2005 is a general provision which cannot override specific provisions relating to confidentiality in earlier legislation in accordance with the principle that where there are general words in a later statute it cannot be held that the earlier statutes are repealed altered or discarded.

Rejecting these arguments, the apex had ordered the disclosure of information relating to loan default and other such details sought by various applicants.

Some of these arguments, rejected by the Supreme Court, were put by the before the CIC during the hearing of Agrawal's case.


 source business standard

Monday, May 22, 2017

Non-Performing Assets(NPA) And SARFAESI Act -

EVERYTHING BANKING NEWS FOR LATEST BANKING NEWS

Non-Performing Assets 

If the customers do not repay principal amount and/or interest for a period of 90 days then such loans become non-performing assets (NPA). 
All those assets which generate periodical income are called as Performing Assets (PA). While all those assets which do not generate periodical income are called as Non-Performing Assets (NPA).

An NPA Is A Loan Or Advance Where:

1. Term Loan – interest and/or installment of principal remains overdue for more than 90 days.
2. Overdraft / Cash credit - account is out of order.
  • Outstanding balance remains continuously in excess of the sanctioned limit / drawing power.
  • Outstanding balance is within the sanctioned limit / drawing power, but there are no credits continuously for 90 days as on the date of balance sheet, or the credits are not enough to cover the interest debited during the same period.
3. Bills purchased and discounted – bill remains overdue for more than 90 days.
4. Short duration crops (crop season is upto a year) – installment of principal or the interest thereon remains overdue for two crop seasons.
5. Long duration crops - installment of principal or the interest thereon remains overdue for one crop season.

Types Of NPA

NPA have been divided or classified into following four types:-
  1. Standard Assets : A standard asset is a performing asset. An assets which is generating regular income to the bank.
  2. Sub-Standard Assets : All those assets (loans and advances) which are considered as non-performing for a period of more than 90 days but less than 12 months are called as Sub-Standard assets. ( Special Mention Account : It includes those assets (loans and advances) which are due for a period of 90 days. "Till 90 days = Special Mention Account and Till 12 Months it becomes Sub-Standard Assets")
  3. Doubtful Assets : All those assets which are considered as non-performing for period of more than 12 months are called as Doubtful Assets.
  4. Loss Assets : All those assets which cannot be recovered are called as Loss Assets.

Example Of NPA 

We suppose that a party was disbursed a loan on January 1, 2010. Its due date is June 1, 2010. But the party does not make a payment. So It will be an Standard Asset from January 1, 2010 till June 1, 2010 (Due Date) It will be a Special Mention Account From June 2, 2010 till August 29, 2010 (90 days) It will be Sub-standard from August 30, 2010 till August 29, 2011 It will be doubtful  from August 30, 2011 till August 29, 2012 It may remain doubtful Asset for a period of 3 years, beginning from 12 months of being an NPA, but once the auditors identify it as a loss, it will be assigned a loss asset; however, the period may be anything above 3 years.

Causes Of NPA

NPA arises due to a number of factors or causes like:-
  1. Speculation : Investing in high risk assets to earn high income.
  2. Default : Willful default by the borrowers.
  3. Fraudulent practices : Fraudulent Practices like advancing loans to ineligible persons, advances without security or references, etc.
  4. Diversion of funds : Most of the funds are diverted for unnecessary expansion and diversion of business.
  5. Internal reasons : Many internal reasons like inefficient management, inappropriate technology, labour problems, marketing failure, etc. resulting in poor performance of the companies.
  6. External reasons : External reasons like a recession in the economy, infrastructural problems, price rise, delay in release of sanctioned limits by banks, delays in settlements of payments by government, natural calamities, etc.

SARFAESI Act 

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, allow banks and financial institutions to auction properties (residential and commercial) when borrowers fail to repay their loans. It enables banks to reduce their non-performing assets (NPAs) by adopting measures for recovery or reconstruction. The Act provides three alternative methods for recovery of non-performing assets, 
  1. Securitisation - This is a process where financial assets (dues from a borrower) are converted into marketable securities (security receipts) that can be sold to investors.
  2. Asset Re-construction - The Act uses the term ‘asset re-construction’ for the acquisition of any right or interest, of any bank or financial institution, in any financial assistance, by any securitization company or Re-construction Company, for the purpose of realization of such financial assistance.
  3. Enforcement of Security Interest - In the normal course, court intervention is required for sale of property and realization of money due from a defaulter. SARFAESI Act has made provisions for banks and financial institutions to take possession of securities given for financial assistance and sell the same in the event of default.

Here Is How This Process Is Takes Place:

1. A borrower makes any default in repayment and his account is classified as NPA.
2. The secured creditor has to issue notice to the borrower giving him 60 days to pay his dues.
3. If the dues are not paid, the bank can take possession of the assets and can also give it on lease or sell it.

Reselling Of NPAs:

The NPAs can be resold as well. The purchasers are called Asset Reconstruction Companies such as Asset Reconstruction Company (India) (ARCIL).
1. A bank can sell NPA from its books to asset reconstruction companies such only if it has remained NPA for at least two years.
2. These sales are only on Cash Basis and the purchasing bank/ company would have to keep the accounts for at least 15 months before it sells to other bank.
3. Once the NPA is purchased, it is classified as Standard for a period of 90 days.

Debt Recovery Tribunal (DRT)

The Debts Recovery Tribunals have been established by the Government of India under an Act of Parliament (Act 51 of 1993) for expeditious adjudication and recovery of debts due to banks and financial institutions.
Debts Recovery Tribunal is the appellate authority for appeals filed against the proceedings initiated by secured creditors under Sub-Section (4) of Section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002.

Appellate Tribunal

Any person aggrieved by an order of the DRT can appeal to the Appellate Tribunal within 30 days of date of receipt of the order. The borrower has to deposit 50% of the amount claimed by the secured creditor, before filing an appeal. The Appellate Tribunal can reduce the deposit requirement to 25% of the amount claimed, after recording the reasons for such a concession.

BOI POSTED NET LOSS 1046 CR IN MARCH 2017 QUARTER END

Bank of India shares fell over 7% on Monday.


Bank of India shares plunged nearly 13 per cent on Monday after the country's sixth-biggest lender by assets, reported a fourth-quarter net loss of Rs. 1,046 crore on higher provisions for bad loans. Bank of India's net loss for the quarter ended March 31 narrowed from a loss of Rs. 3,587 crores a year earlier, the Mumbai-based lender said in a statement on Monday.

Analysts on average had expected a net profit of Rs. 60.23 crore, according to data compiled by Thomson Reuters.

Bad loans as a percentage of total loans rose to 13.22 percent at the end of March, compared with 13.38 percent in the preceding quarter, and 13.07 percent a year ago.


Provisions for non-performing assets fell to Rs. 4,484 crore from Rs. 5,442 crore a year earlier, the bank said.

Bank of India shares closed 11.10 per cent lower at Rs. 158.50 apiece, compared to 0.11 per cent gain in the broader Nifty.

Sunday, May 21, 2017

25% of new bank branches to be in villages: RBI's new policy

The (RBI) on Thursday mandated that 25 per cent of the total number of 'banking outlets' opened during a financial year should be located in unbanked rural centres.
The mandated this in its notification -- "Rationalisation of Branch Authorisation Policy- Revision of Guidelines" -- issued on Thursday.
"Domestic scheduled commercial (other than RRBs) are permitted to open, unless otherwise specifically restricted, banking outlets in tier 1 to tier 6 centres without having the need to take permission from in each case," the central bank said in the notification.
"At least 25 per cent of the total number of 'Banking Outlets' opened during a financial year should be opened in unbanked rural centres."

Here are the highlights


has widened the role of bank boards, making them responsible for complying with the new guidelines
—The removed the restriction on tier-I branches, which was earlier linked to the number of branches opened in the unbanked areas.
has also changed the definition of what constitutes a branch. As against the earlier definition of considering all the outlets including extension counters and ATMs as a 'branch', the new provisions have changed the nomenclature to calling it as a 'banking outlet'.
—There will be a 'banking outlet' which will be open for minimum four hours a day and five day a week

—There is scope for a part-time banking outlet which will be a fixed point service unit but not comply with working hours requirement.
—The had constituted an internal working group before coming out with the draft guidelines

—The final guidelines issued on Thursday are operational with immediate effect

UNDER BJP RULE NPA HAVE TRIOLED FROM RS2.3 LAKH CR TO 6.8 LAKH CR 70% NPA FROM CORPORATE HOUSE

India’s banking system, which was robust enough to withstand the financial crisis of 2008, is facing a crisis today. The banks, particularly the public sector ones, are burdened with huge amounts of non performing assets (NPAs), which are threatening the viability of the banking sector.
In the last three years, under BJP rule at the center, the NPAs of the banks have tripled - from Rs. 2.3 lakh crores to Rs. 6.8 lakh crores. Currently, the NPAs of public sector banks stand as high as 11% of their total advances.
Non-repayment of loans by some of India’s biggest corporate houses is the major cause of this huge accumulation of NPAs. According to the chairman of Parliamentary Accounts Committee, K V Thomas, a handful of big corporate houses account for 70% of the NPAs of the banks.
The Finance Minister Mr. Arun Jaitly, tried to absolve himself and his government of all the blame, claiming that the NPAs are a legacy problem. According to him the loans that were given during UPA government have turned bad and are accumulating as NPAs today.
While it is true that the UPA government compelled the public sector banks to dole out loans worth lakhs of crores to a handful of corporates, the BJP government is not far behind. It is helping the same corporates in continuing to default on the repayments – with the aid of loan refinancing and restructuring schemes introduced by the Reserve Bank.
In the last three Modi years, public sector banks have been pressured to restructure bad loans (under various schemes of RBI) worth Rs. 3.5 lakh crores belonging to the corporate houses.. These restructuring deals simply meant that the companies get new loans to pay off their old loans, which they have already defaulted on. These schemes also involve changing the terms of payments in favour of the defaulting corporates.
The infamous case of Vijay Mallya defrauding the public sector banks, is all too well known. Less publicised are those of Modi’s own crony capitalists. It is estimated that companies controlled by Adani, owe a debt of Rs. 72,000 crores mostly to public sector banks.
Since 2014, two power companies controlled by Adani’s firms have been extended loan refinance worth Rs. 15,000 crore by the public sector banks. This was done when both the companies’ earnings -before tax- were not even enough to cover the interest cost on the loans they have taken. In this sweetheart deal, the previous defaulted loans were replaced with new loans and loan repayment date was extended by one more decade. Additionally, a moratorium on interest payments was given for a considerable period, meaning that in this period these two firms need not pay even the interest amount.
Similarly, after Modi came to power, Mr. Mukesh Ambani’s Reliance Gas Transport Infrastructure Ltd. (RGTIL), was given a loan refinance of Rs. 4,500 crores and an extension of payment period by more than a decade.           
According to Arun Jaitly, most of the NPAs and bad loans are due to projects in power, infrastructure, mining and steel sectors - which are owned by the large corporates like Reliance, Adani and Vedanta. Let us not forget, these are the same companies (remember Vedanta’s land grab in Orissa), whose factories and plants were set up by grabbing thousands of acres of land belonging to famers and tribals.
These billionaire promoters and owners of the companies should have been compelled to transfer the shares (equity) of these companies, to the public sector banks, in lieu of the unpaid loans. Or, they should have been made to inject fresh capital in to the defaulting companies. Refinancing of the loans, extension of payment schedules and moratoriums on interest payments – without placing any responsibility on those who control the companies are bound to bring even heavier losses to the banks in the coming days.
The government seems to think that Mukesh Ambani, with net worth of more than Rs. 1.5 lakh crore rupees needs assistance in paying back the loans of his companies, while the farmers of this country are given no recourse after severe droughts and crop losses. Desperate after years of draught, farmers from Tamil Nadu and elsewhere have been agitating for months for loan waivers. Their appeals to the central government have fallen on deaf ears. Modi government steadfastly refused to provide any assistance to the debt ridden farmers. Are the farmer’s making ridiculous demands? Consider this – The entire amount of crop loans in India is worth Rs. 75,000 crore, while Mr. Adani’s firms alone owes Rs. 72,000 crores to the banking system. Adani gets a generous restructuring on the defaulted loans, while the farmers get tough love.
While the corporates are being given a free pass, Mr. Modi’s pets in RBI are baying for the blood of public sector banks. Recently, RBI’s deputy chairman Viral Aacharya suggested that the solution to the NPA crisis is re-privatisation of some of the public sector banks and some divestment of government’s stake in others, in favour of private players. RBI Chairman, Mr. Urjit Patel was not far behind, with suggestion that small banks afflicted with NPA problems should be allowed to perish naturally. The RBI satraps seem to be forgetting that it is the bulwark of public sector banks that protected India’s financial system from the crisis of 2008.
For Mr. Modi it is not enough, that Indian corporates have defrauded banks of the public money, they are now being offered the ownership of these banks.
Concession after concession given to corporates is what marks Mr. Modi’s 3 years at the helm and there is no indication of change in course away from this. Mr. Modi is making sure that those whose money purses have brought him power are going to stay safe and sound from the consequences of their own financial and business follies. Now that he has passed a law allowing corporates to make anonymous donations to political parties, grateful corporates will no doubt be flooding him with gratitude funds for his never ending election campaigns.

Goods And Services Tax (GST) is an upcoming system of taxation in India which will merge many individually applied taxes into a single tax. see details

GST is one indirect tax for the whole nation which will make India one unified common market.
GST is a destination based tax on consumption of goods and services.

--Destination based tax means , the tax would accrue to the taxing authority which has jurisdiction over the place of consumption ( which is also called as place of supply )

--GST will be levied at all stages right from manufacture upto final consumption.

--Credit of taxes paid at previous stages will be available as set off.  In other words , only value addition will be taxed and the burden of tax is to be borne by the final consumer.

Following taxes currently levied and collected by the centre will be subsumed by GST or you may say that GST will replace following taxes.

1. Central Excise Duty
2. Duties of Excise (medicinal and toilet preparations)
3. Additional duties of excise ( Goods of special importance)
4. Additional duties of Excise ( textile and textile products)
5.Additional duties of custom ( commonly known as CVD)
6. Special additional duties of Custom (SAD) 
7. Service Tax
8. Central Surcharges and Cess so far as they relate to supply of goods and services.

Following are state taxes that will be subsumed under GST

1. State VAT
2. Central Sales Tax
3. Luxury Tax
4. Entry Tax ( all forms )
5.Entertainment and Amusement Tax ( except when levied by local bodies).
6.Taxes on Advertisement
7. Purchase Tax
8.Taxes on Lottery, Betting and Gambling
9. State surcharges and Cess so far as they relate to supply of Goods and services.

GST council will make recommendation to Union and States on the taxes, cesses and surcharges levied by centre , states and local bodies which will be subsumed under GST

Goods and Services Tax (GST) is an upcoming system of taxation in India which will merge many individually applied taxes into a single tax. 

The GST is governed by GST Council and its Chairman is Union Finance Minister of India - Arun Jaitley.

GST is a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India to replace taxes levied by the central and state governments.

This method allows GST-registered businesses to claim tax credit to the value of GST they paid on purchase of goods or services as part of their normal commercial activity. 

Administrative responsibility would generally rest with a single authority to levy tax on goods and services.

Exports would be considered as zero-rated supply and imports would be levied the same taxes as domestic goods and services adhering to the destination principle in addition to the Customs Duty which will not be subsumed in the GST.



The GST regime will have five slabs including the zero-tax rate for items of basic needs. The highest rate of 28 per cent will apply on luxury and demerit goods, which will also attract varying cess over and above applicable GST.


Prices of items will change from Ist of July 2017 as the GST is proposed to be implemented from that day. 

The GST council has finalised the tax slabs for all the articles of consumption.

7 (Seven) per cent of the items fall under the exempt list 

14 (forteen) per cent of the items have been put in the lowest tax bracket of 5 per cent.

17 per cent items are in 12 per cent tax bracket, 

43 per cent of items are in 18 per cent tax slab and 

only 19 per cent of goods fall in the top tax bracket of 28 per cent. 

This means that as many as 81 per cent of the items will attract 18 per cent or less GST.

NO GST SLAB

Foodgrains, milk and other articles of daily use have been exempted from taxation under the GST regime.

These items are: 

Foodgrains, gur, milk, eggs, curd, lassi, unpacked paneer, natural honey, fresh vegetables, fruits, atta, besan, maida, vegetable oil, Prasad, common salt, contraceptive, bread, bindi, vermillion, stamp, judicial documents, printed books, bangles and handloom products.

5 PER CENT GST SLAB

The items that are used daily but are not considered articles of basic necessity are taxed at 5 per cent under the GST regime.

These items are: sugar, tea, coffee, edible oil, coal, skimmed milk powder, milk food for babies, condensed milk, packed paneer, newsprint, umbrella, PDS kerosene, LPG, broom, fish fillet, cream, frozen vegetables, spices, pizza bread, juice, sabudana, coal, medicines, stent and lifeboat.

12 PER CENT SLAB

The items that are not essential but used by large number of households and people will attract 12 per cent GST.

These items are: 

Butter, ghee, mobile phones, cashew, almonds, sausages, fruit juices, packed coconut water, agarbatti, frozen meat products, animal fat, mixtures, ayurvedic medicines, tooth powder, colour books and sewing machine.

18 PER CENT SLAB

The articles are considered to be used by middle class people will attract 18 per cent GST from Ist of July 2017.

These items are: 

Hair oil, soap, toothpaste, capital goods, industrial intermediaries, pasta, corn flakes, jams, soups, ice-cream, toilet paper, facial tissues, iron and steel, fountain pen, mineral water, camera, speaker, icecream, envelops and instant food items.

28 PER CENT SLAB

Such items, which are considered as luxury goods or health hazards will attract 28 per cent GST under the new taxation regime from July 1

These articles are: 

Consumer durables, cars, cement, chewing gum, custard powder, pan masala, perfume, shampoo, make-up items, fireworks, motorcycles, paint, deodorant, shaving cream, hair dye, washing machine, vending machines, vacuum cleaner, hair clippers and dish washer.

Following Items Will  BECOME CHEAPER

Foodgrains, cereals and milk will cost less from July 1 when the Goods and Services Tax (GST) is rolled out. 

Currently in many state VAT is charged on food-grains including wheat and rice and also on milk products.

However, sweets will attract five per cent GST but it will still become cheaper at places where VAT is charge right now.

Common use products like hair oil, soaps and toothpaste will be charged at 18 per cent GST instead of present 22-24 per cent tax.

Daily-use items like sugar, tea, coffee (barring instant coffee) and edible oil will attract the lowest tax rate of 5 per cent. 

So, there won't be much difference in pricing after GST is rolled out as these articles attract almost the same tax at present.

Saturday, May 20, 2017

state wise Aadhaar and Mobile seeding in overall savings account


Add caption

RBI Governor Urjit Patel suggests merging public sector banks

RBI Governor Urjit Patel has said the Indian banking system could be better off if some public sector banks are consolidated to have fewer but healthier entities, as it would help in dealing with the problem of stressed assets. 

"As many have pointed out, it is not clear that we need so many public sector banks. The system could be better off if they are consolidated into fewer but healthier banks," Patel said while delivering the Kotak Family Distinguished Lecture at Columbia University here. 


He said since there were cooperative banks and micro- financial institutions to provide community-level banking, "some banks can be merged, as a quid pro quo for timely government technical injection". 

Patel said a challenge that India's central bank was grappling with was the large stressed banking sector balance sheets. 

He noted that a series of measures have been taken in the past year on resolving the problem of the non-performing assets (NPAs), including completion of a comprehensive asset quality review of the banks. 

Patel said in the instance of the insolvency and bankruptcy code, the Reserve Bank of India (RBI) has been preparing actively for the next step in an orderly resolution and this will be undertaken concomitantly with the resolution of the weakest bank balance sheets under the aegis  of a revised prompt corrective action framework. 

"One of the things that the public sector banks need to do is to raise private capital from the market and not rely on government largesse," he said. 

Public sector banks have to be required to share the burden of recapitalising, Patel said. 

This will be a good way to restore some market discipline and get the banks and their shareholders to more seriously care about management decisions, he said. 

Patel also said that consolidation of banks could also entail sale of real estate where branches are redundant as well as offering voluntary retirement schemes to manage headcount and adding younger, digital-savvy personnel. ..
 
The weaker banks are losing market share (and) that is a good thing," Patel said. 

"The stronger banks are gaining market share, which is a good thing, particularly the private sector banks. In a way it is working; those who need to shrink are shrinking. 

"Lenders who are stronger are gaining more market share. I think there is a nice shift happening and we need to work with that to resolve this," he said. 

Patel said that divestment in public sector banks would have a positive role for the sector. 

"Divestment measures would improve overall banking sector health," he said. 

Improved market valuations would create an opportune time for the government to divest some of the ownership in the restructured banks and this would reduce the overall amount that the government needs to inject into them to deal with the problem of NPAs and stressed assets, he said. 

Patel said that across the nation, forces were gathering critical mass for the launching of reforms that will help the country achieve a higher growth. 

"The materialisation of reforms in the form of rollout of the GST, the institution of Indian Insolvency and Bankruptcy Code and the abolition of the Foreign Investment Promotion Board should boost investor and investment confidence," he said. 

Looking ahead, Patel said India's economic growth was getting a boost with domestic drivers and was poised to be 7.4 per cent in 2017-18. 

"India will remain among the fastest growing economies," he said, adding that its growth acceleration was reflective of its resilience. 

Patel said that inflation was below target, the current account deficit was about one per cent of GDP and fiscal deficit was on path of consolidation that will take it down to three per cent by 2018-19

He noted that recent sharp decline in inflation was essentially the result of supply shocks. 

Giving a comprehensive view of the demonetisation process undertaken by the government, Patel said its positive spillover was reflected in higher financial reintermediation. 

The share of low cost current account and savings account deposits in aggregated deposits with commercial banks went up to about 39 per cent, which is a four percentage increase relative to pre-demonetisatio ..period

That is a large number on a large base. Financial reintermediation could be one of the biggest collateral benefits of this exercise, but time will tell. It's too early to tell but initial statistics are interesting," he said. 

In the wake of demonetisation, conventional and unconventional steps undertaken like issuance of short term cash management bills and using the large size of RBI balance sheet helped the central bank to "manage this, otherwise interest rates would have collapse ..the RBI governor said. 

He said there seems to be very little evidence of hysteresis following demonetisation. 

"If we had hysteresis, it would have meant some of the bad implications in terms of lower GDP growth etc. but as the demonetisation shock was overtaken by the remonetisation, things have come back to normal," he said. 

Patel stressed that the collateral benefit of demonetisation was faster transmission of monetary policy, which strengthened in thein the second half of 2016-17. 

"Accumulating evidence points to effects of demonetisation being transitory contrary to general perception. GDP slowdown was cushioned by robust consumption and government spending," he said, adding that despite the demonetisation shock, the GDP growth remained at 7 per cent in Q3 and Q4 as compared to 7.2 per cent and 7.4 per cent in the preceding year. 
Patel said it was important to keep in mind that credit was more important than currency. 

"Credit was not affected at all. The demonetisation was essentially one mode of payment being temporarily not available to the full extent" but cheque payments were not affected, the mode of payment that banks use to settle their balances was not affected, he said. 

In retrospect, it (demonetisation) would not affect the economy that much because currency while important is still a small part of the transaction instrumentality that is used in a modern economy," he said. 

"So the call market, GSec market, GDP growth, inflation and stock market all showed transitory impact of the demonetisation and the recovery in all these indicators has been swift," he said.