managers of the over Rs 10,000-crore corpus of these two funds. It has alsoapproved setting up of an investment board for deciding investment policies. Thiswould primarily be applicable to new deposits into these schemes, as much of theexisting corpus is already invested in government bonds.
RBI measures to tackle liquidity crisis:
In the month of October 2008 the government and RBI took all possible measuresto shovel in as much money into the financial system as possible. RBI releasedbank funds it had impounded, allowed banks to borrow more against gilts, madeNRI deposits a little more attractive. The Centre, after delaying borrowing,advanced its spending by releasing Rs 25,000 crore to banks. Significantly, thegovernment also promised to recapitalize banks. The one percentage point cut inCRR, which was with retrospective effect from October 11, 2008, released Rs40,000 crore. This, with the farm relief package, released around Rs 65,000 croreinto the banking system.
Fresh guidelines on Basel II:
As part of efforts to prepare Indian banks for compliance with new riskmanagement norms under Basel II, Reserve Bank of India (RBI) has come out withguidelines asking them to keep adequate capital to meet wide areas of risks,including those that could damage their reputation. The guidelines issued onSupervisory Review Process (SRP) ask banks to make provision for risks relating tocredit concentration, liquidity, settlement risk, reputation, strategy, and under