Answer: There are strong indications that the Reserve Bank of India (RBI) would launch a digital currency by the end of this calendar year. A pilot project will be launched initially because a digital currency is a totally new product both in India and globally. The Reserve Bank is currently studying various risks involved in launching the digital currency having regard to the security aspect as well as impact on India’s financial sector. Studies are being conducted to determine how this currency would affect monetary policy and the paper currency in circulation. The central bank is yet to determine whether to launch this currency using the Distributed Ledger Technology or using a centralized ledger. DLT is the platform on which crypto currencies are generally based and traded without any central authority.
Q:Currently while trading on stock exchanges, we have to wait for two days for the transaction to be reflected in our account, whether for buying or selling securities. Is there any move to shorten the period so that there is better monitoring of all traded transactions?
A: The Securities & Exchange Board of India has recently issued a circular permitting stock exchanges to reduce the settlement cycle from T+2 system to T+1 system for all stocks in the cash segment. Therefore, it will be for each stock exchange of India to reduce the settlement process by one day with effect from 1st January, 2022. Earlier, from April 2003, the Indian market had moved to the T+2 cycle from T+3 cycle. Currently in India, the T+2 settlement cycle has been working like in most stock markets of the world. While SEBI has given option to a stock exchange to shift to the T+1 settlement cycle after giving a month’s notice about such change, it has to continue on T+1 settlement basis for atleast six months from the date of the change. After six months the stock exchange may, at its option, revert to the T+2 settlement cycle again by giving one month’s notice. It is anticipated that for the smooth functioning of T+1 settlement cycle, operational and technical challenges will have to be dealt with involving banks, brokers’ back offices, depositories and other agencies participating in trading, settlement and post-settlement processes.
Q: My son who is graduating in India wants to go to the United States for higher education. However, I am concerned about the prospects of getting a visa from the US Embassy. Will it be possible to obtain an education loan from an Indian bank?
A: Surprisingly the United States Embassy in India stated that during the current year students travelling to the United States have exceeded 55,000 which is a record high. Number of students going to the United Kingdom has also increased through the British Centralised Application System. Banks are also gearing up to support students by giving higher amount of education loans at lower rates of interest than the rates charged earlier. Interest rates are down by 50 basis points and the loan ticket size has been increased from Rs3 million to Rs3.5 million. Prodigy Finance which has a $1.5 billion education loan book has estimated that India will have the fastest growing market with a 60 per cent increase in loans in 2021.
H. P. Ranina is a practicing lawyer, specialising in tax and exchange management laws of India.
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