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Cabinet Helps Bank Depositors Withdraw Up to Rs 5 Lakh in 90 Days

This measure will cover 98.3% of all deposit accounts and 50.9% in value terms

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Cabinet Helps Bank Depositors Withdraw Up to Rs 5 Lakh in 90 Days
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Cabinet has cleared the Deposit Insurance and Credit Guarantee Corporation (DICGC) Bill and Limited Liability Partnership (LLP) Amendment Bill. In an effort to protect the interest of depositors, it will cover banks placed under a moratorium and will enable depositors to withdraw up to Rs 5 lakh in 90 days. This measure will cover 98.3 per cent of all deposit accounts and 50.9 per cent in value terms, in comparison to global standards of 80 per cent and 20-30 per cent respectively.

Germany’s Gfk consumer confidence index rose to (-) 0.3 points in July 2021 from (-) 6.9 points in June 2021 and is expected to remain at (-) 0.3 points in August 2021 as well. Improvement in July 2021 was led by propensity to buy index (14.8 from 13.4). On the other hand, as pace of vaccination slowed significantly and inflation concerns rose again, income expectations (54.6 versus 58.4) and economic expectations (29 versus 34.1) fell. Inflation remains a concern due to higher energy prices, the introduction of CO2 pricing, and the rollback of VAT cuts.

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The US Fed has left the target range for federal funds rate at 0-0.25 per cent and informed that the economy is making progress towards its goals of full employment and 2 per cent average inflation. It reiterated that the current pickup in inflation is transitory and the US is still away from making substantial progress towards full employment goals. Going forward, with an increase in vaccination rates, each wave of Covid-19 is expected to have a less economic impact on the economy.

Markets

Bonds: Global yields closed mixed. US 10Y yield fell by 1bps (1.23 per cent) as Fed did not specify any timeline for tapering its current stimulus. UK 10Y yield rose by 2bps (0.58 per cent) as the government waived quarantine rules for fully vaccinated arrivals from the US and Europe. Crude prices rose by 0.3 per cent ($ 75/bbl). India’s 10Y yield closed flat at 6.23 per cent.

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Currency: Except JPY, other global currencies closed higher against the dollar. DXY fell by 0.1 per cent as the Fed refrained from giving hints about the timeline of policy tightening. GBP gained by 0.2 per cent as Covid-19 cases in the UK showed signs of deceleration. INR appreciated by 0.1 per cent. It is trading further higher today in line with other Asian currencies.

Equity: Barring FTSE and Dax, other global indices ended lower as investors monitored Fed's policy meet and corporate earnings. Nikkei (1.4 per cent) dropped the most followed by Shanghai Comp (0.6 per cent) and Dow (0.4 per cent). Sensex (0.3 per cent) too ended in red led by sharp losses in auto and banking stocks. However, it is trading higher today in line with other Asian stocks.

[Based on inputs from Bank of Baroda]

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