Reserve Bank of India (RBI) Governor Sanjay Malhotra said the repo rate cut in the February meeting of the monetary policy committee (MPC) was due to inflation aligning with the target and recognising the fact that monetary policy is forward-looking.
Kotak Mahindra Bank's net interest margin is likely to swell after the Reserve Bank of India (RBI) lifted its restrictions on the private lender that barred it from issuing fresh credit cards and onboarding new customers through digital mode, brokerages said on Thursday. The bank's net interest margin (NIM) has seen a decline of over 35 basis points (bps) since the restrictions were imposed by the regulator in April 2024.
The co-operative banking sector is well regulated, and a few cases of restrictions being imposed by the Reserve Bank of India (RBI) should not paint a negative picture of the entire sector, said Department of Economic Affairs (DEA) secretary Ajay Seth on Monday. "Co-operative banks in the country are generally quite robust, and the RBI takes regulatory action whenever issues arise.
Currently, deposits of up to Rs 5 lakh are covered under the deposit-insurance scheme.
'However, this process will take some time. Depending on the approval timeline, it may span a few quarters.'
'We have opened 100 branches in the last one and a half years. Our manpower is also in place.'
The recent depreciation of the rupee along with sharp fall in the country's foreign exchange (FX) reserves has sparked a debate whether stability of the exchange rate is necessary and desirable. The rupee was one of the least volatile currencies among peers for almost two years before the current downward pressure started in September after the US Federal Reserve lowered interest rate.
With short-term rates firming up due to tight liquidity conditions, Indian corporates are opting to borrow long term to take advantage of the attractive rates by locking them in these uncertain times. The banking system has a liquidity deficit of over Rs 2 trillion. According to market participants, engineering conglomerate Larsen & Toubro (L&T) raised Rs 1,500 crore through 10-year bonds in December 2024.
With rising disposable incomes in cities beyond metros, the penetration of credit cards - and consequently, credit card spending - is growing at a much faster pace than in traditional metro cities, primarily driven by e-commerce spending.
'Growth, liquidity and deposit mobilisation are likely to be discussed during the interaction.'
The draft digital personal data protection (DPDP) rules, which require banks to obtain explicit consent from their customers before using their data for purposes beyond the original intent, although is being followed in spirit, leaves no room for regulatory arbitrage, experts said. They said that the potential business impact is difficult to assess at this stage, but the formalisation of these rules will mean banks now need to establish clear data processing agreements with third-party entities to ensure compliance.
'Health and motor insurance will continue to be our two most important segments'
In 2025 banks are in for challenges such as pressure on margins and slowing credit growth. With the likelihood of a repo rate cut in February or April, external benchmark-linked loans of banks will be repriced immediately. However, deposit rates are expected to adjust more gradually, which could impact the net interest margin (NIM) - a key measure of profitability for banks.
Commercial banks in India reported a sixth consecutive year of rise in their net profits in 2023-24 while bad loans continued to fall, according to the Reserve Bank of India's (RBI's) annual publication "Trends and Progress of Banking in India", released on Thursday. "Banks' profitability rose for the sixth consecutive year in 2023-24 and continued to rise in H1:2024-25 with the return on assets (RoA) at 1.4 per cent and return on equity (RoE) at 14.6 per cent," the report said.
Sanjay Malhotra takes charge as the 26th RBI governor at a time when headline retail inflation has shot up to 6.2%.
'Challenge is basically near-term growth as the outlook has turned a bit adverse.'
'We have seen something do very well when the times are good but maybe not as well when the times are bad.'
At a time when banks are finding it challenging to mobilise resources, State Bank of India (SBI)-the country's largest lender-has devised a three-pronged strategy to boost deposit accretion. First is an aspirational product that promises to make depositors lakhpatis by helping them grow their deposits to Rs 1 lakh through recurring deposit (RD) schemes.
The December meeting of the Reserve Bank of India's (RBI's) six-member Monetary Policy Committee (MPC) will start on Wednesday even as there is no clarity on whether Governor Shaktikanta Das, the chair of the panel, will continue in office after his term ends next week. The outcome of the meeting will be announced on Friday by Das at 10 in the morning.
Despite gross domestic product (GDP) growth being lower-than-expected for the July-September quarter, the six-member Monetary Policy Committee (MPC) may not cut the policy repo rate in the review meeting scheduled for next week due to high inflation in October, according to experts. "Consumer Price Index (CPI) inflation breaching the upper limit of the RBI's tolerance band in October (6.2 per cent year-on-year) is not a favourable backdrop for the MPC to commence the easing cycle, even as the growth outcome disappointed the MPC's expectations," said Shreya Sodhani, regional economist at Barclays, who expects the policy repo rate to be kept unchanged in the December meeting.
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