National Economic News
RBI offers breather to non-scheduled cooperative banks in terms of maintaining SLR
Reserve Bank has offered fresh breather to non-scheduled state cooperative banks and central cooperative banks in terms of maintaining statutory liquidity ratio (SLR). The central bank has extended the deadline for maintaining SLR as stipulated for all banks from March 2017, instead of March 2015. At present, all mainstream banks maintain 22.5% SLR. The central bank said that the SLR for these cooperative banks should be 5% as on March 2015 and 10% as on March 2015 and 10% as on March 2016. These banks maintain 4% SLR at present.
RBI suggests counter-cyclical buffer be linked to credit- GDP gap
A Reserve Bank panel has suggested that countercyclical capital buffer for banks as a cover against bad times may automatically increase when the credit to economic size, and proportion of credit to deposits grow. The panel did not recommend any buffer when credit to GDP gap remains below 3% but it should increase gradually to 2.5% of banks’ risk weighted assets, when credit grows in relation to GDP. Below the lower threshold of 3%, the buffer will not be activated provided its relationship with gross sticky loans becomes significant.
World Economic News
Bundesbank Expects Germany Economy To Stall In Q2
The German economy is likely to stall in the second quarter as geopolitical concerns dragged industrial production, Bundesbank said in its monthly report. Industry shifted down a gear, it said. Considering that the services sector probably expanded further, the real adjusted GDP could have kept the same level in the second quarter as in the first quarter, the bank added. The Federal Statistical Office is set to publish second quarter GDP data on August 14. The economy grew 0.8% sequentially in the first quarter.