Economy News Notes

Vostro is an account that one party holds for another.
“With a view to giving more operational leeway to the AD Category-I banks, it has been decided to dispense with the requirement of prior approval of the RBI for opening and maintaining each rupee vostro account in India of non-resident exchange houses in connection with the rupee drawing arrangements (RDAs) that banks enter into with them,” the apex bank said in a circular.
The RBI said that approved dealer banks could now take its permission the first time they entered into such an arrangement with non-resident exchange houses from the Gulf countries, Hong Kong, Singapore and Malaysia.

In a step to increase the capital adequacy and improve the asset quality, the government has decided to subscribe to preferential equity shares issued by State Bank of India (SBI) and Punjab National Bank (PNB).
- State Bank of India (SBI), India's premier public sector bank, said that it would receive around Rs.7,900 crore
- Punjab National Bank (PNB) would receive around Rs.1,285 crore
In October 2011, Moody's had downgraded SBI's standalone rating, citing inadequate capital and declining asset quality.
- SBI had then said it required at least Rs.8,000 crore before March, 2012, to maintain Tier-I capital adequacy ratio of 8 per cent, a level that the government seeks to maintain in state-owned banks.
The bank had planned a $4.5-billion rights issue earlier to boost its capital. However, this was scrapped.