[BES171] Banking: Standing Deposit Facility (SDF), Tri-Party Repo, Countercyclic Capital Buffer (CCCB), BASEL-III Recapitalization & Indradhanush

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India Yearbook
  1. Banking: PCA Framework, Countercyclical capital buffer (CCCB) and BASEL-III Capitalization Norms
  2. Monetary Policy Update: standing deposit facility (SDF), Tri-party Repo Rate, Half Hour NEFT window

Prologue: from now on, all Powerpoint available at http://mrunal.org/powerpoint

Banking: PCA Framework, Countercyclical capital buffer (CCCB) and BASEL-III Capitalization Norms

  • Banks must maintain an adequate capital base to protect themselves against “bank runs” and NPAs. Therefore, BASEL Committee on banking supervision has prescribed certain norms.
  • First: they must maintain a minimum capital to risk weighed asset ratio (CRAR). RBI has prescribed limits and deadlines for its compliance.
  • To comply with these norms, public sector banks of India will require 1.8 lakh crore additional capital, out of which, government of India is supply Rs. 70,000 crores under the Mission Indradhanush.
  • Secondly, during the boom period, Banks are required to set aside certain capital buffer, which they’ve to use as loans during the bust period. This is known as countercyclical capital buffer- although RBI Governor Dr. Urjit Patel has said, we don’t need it for the moment.
  • In 2002, the then RBI governor Bimal Jalan had drafted prompt corrective action (PCA) framework against weak banks, now Dr. Urjit Patel has further strengthen it. In what circumstances can RBI use this tool, we shall see in today’s lecture.

Monetary Policy
Youtube Link: https://youtu.be/nM72gdBPmAU

Monetary Policy Update: standing deposit facility (SDF), Tri-party Repo Rate, Half Hour NEFT window

  • As such we covered the theory monetary policy and review of bi-monthly monetary policies during 2016-17.
  • But, afterwards RBI released the first bimonthly policy of the financial year 2017 – 18 in April 2017. it contains so many new changes, so I have add it as a rejoinder to the topics I’ve already taught.
  • Earlier we had learned that to absorb the excess liquidity created by the demonetization, forced RBI to impose incremental CRR, and issue Cash management bills under the market stabilisation scheme (MSS). But now those CMB are maturing, so to temporarily absorb that excess liquidity under reverse repo mechanism, RBI narrowed the policy corridor.
  • What is standing deposit facility (SDF)
  • Swapping of the collateral in repo window.
  • Frequency of NEFT settlements increased from one hour to half hour.
  • Prompt corrective action framework (PCA) against weak banks.

Youtube Link: https://youtu.be/j3mZGQ1ymOM
Next lecture: Non Performing Assets (NPA), Bad Bank.

Mrunal recommends

  1. (free) NCERT, NIOS, TN-Books
  2. Environment by ShankarIAS
  3. Indian Polity M.Laxmikanth (Hindi | English)
  4. Art & Culture by Nitin Singhania (Hindi | English)
  5. Spectrum: Modern History (Hindi | English)
  6. Bipin Chandra: Post Independence
  7. Fast-track to Arithmetic Rajesh Verma
  8. MK Pandey’s Analytical Reasoning
  9. Disha’s Topicwise Paperset (Hindi | English)
  10. School Atlas
  11. Mains: Language papers
  1. (free) NCERT, NIOS, TN-Books 4 History,Geo,Sci
  2. Indian Polity M.Laxmikanth (Hindi | English)
  3. Spectrum: Modern History (Hindi | English)
  4. Maths: Quantam CAT Sarvesh Kumar
  5. Objective General English SP Bakshi
  6. Word Power made Easy -Norman Lowe
  7. Topic wise Solved Paperset by Disha

So far 10 Comments posted

  1. Jason Jones

    ahhhh… finally glad to see you again ….
    Thnak you sir , for coming with BES171 series .

  2. sarthak

    pls complt lecture before prelims

  3. Abhijeet Joshi

    Thank u Sir ji 🙂

  4. n4mit

    Please upload the ppt on mediafire link as well Mrunal 🙂

  5. Shanky Verma

    Thanks a lot sir……….

  6. vertika mallik

    Thank you for sharing this.This is very helpful for students.MahendraGuru


    Thank you Sir….

  8. kunal

    Thanks a lot sir. Much awaited lecture… a sincere and humble request to you if other lectures could also be uploaded soon…

  9. Subhankar

    Monetary Policy Update video link is posted in the ‘Banking: PCA framework’ section and vice versa.

  10. Aditya nayak

    Pls tell me the name of books which we should reffer for prilims

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