Falling reserves Subject : Economy Context: The Indian central bank’s 2013 playbook to buffer the domestic currency against depreciation  and rebuild foreign exchange reserves is unlikely to prove fruitful. Details: The Reserve Bank of India reduces its forex reserves by selling dollars to defend rupee depreciation. In 2013 RBI – swapped the U.S. […]

    Inflation targeting Subject :Economy Context: According to the RBI the latest and first report of target breach is “privileged communication” the central bank will not make it public. Details: If the RBI does not make the report public, the government may like to do so for stakeholders to form rational expectations. Concept: Flexible inflation […]

    Financial Liabilities of Household Sector in India Subject :Economy Context: In the recent period, liabilities of the household sector have increased and their assets in the form of accumulated savings have also enlarged according to an article  ‘Financial Liabilities of Household Sector in India  in the RBI’s latest monthly Bulletin. Details: Total borrowings […]

    Bigtech pose risks Subject :Economy Context ‘Bigtechs’ pose systemic risks to financial stability: RBI paper–‘’Bigtechs’ in the Financial Domain: Balancing Competition and Stability’. Details: They pose challenges to financial stability due to their  technological advantages, large user base, wide-spread use by financial institutions and network-effects. The complex governance structure of bigtechs limits the […]

    Digital banks Subject :Economy Context: Prime Minister Narendra Modi dedicated 75 digital banking units to the nation. Details: The Union Budget for 2022-23 proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks. It would further financial inclusion and improve banking experience for the […]

    Why is inflation systemic now? Subject : Economy Context: Since May, the Reserve Bank of India has raised the repo rate by 190 basis points yet it hasn’t checked credit growth so far making inflation systemic . Concept: Systemic Inflation It  implies higher prices for general goods and services over a longer and […]

    Banking sector Subject :Economy Context: The Nobel in Economics has been awarded to Bernanke, Diamond and Dybvig for their “research on banks and financial crises” undertaken in the early 1980s which have formed the foundations of what constitutes most modern banking research. Details: Diamond and Dybvig  postulated theoretical models on banks’ role in […]