The liquidity in the banking system moved into surplus almost after three months as the Reserve Bank of India (RBI) absorbed over Rs 40,000 crore from the market on Monday, predominantly on the back of increased government spending. However, this situation may be short-lived given the higher demand for funds to pay taxes and year-end targets, treasury executives said. Meanwhile, two variable reverse repo rate (VRRR) auctions held on Tuesday received weak response.
RBI said inflation in the second half of the current fiscal is projected at 2.7-3.2%. It retained its GDP forecast for the current fiscal at 7.4%
Former central bank deputy governor S S Tarapore today said the Reserve Bank of India's monetary measures to contain inflation have been "appropriate" as of today
Monetary policy committee had recommended no change in the key rate.
LIC Housing Finance (LICHF) delivered a healthy FY24 with improvements in net interest margin (NIM) and credit costs and an improved return on assets of 1.7 per cent compared to an average of 1.3 per cent between FY14-FY23. Loan growth was low due to technology upgrades to the platform in H1FY24, though momentum improved in H2FY24. In Q4FY24, the net interest income (NII) came in at Rs 2,250 crore.
'If all goes well, we may well hit or even surpass the forecast growth rate.'
The Reserve Bank of India on Thursday opted for a pause second time in a row, maintaining key benchmark policy rate at 6.5 per cent as inflation moderates. The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022. Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) unanimously decided to keep the rate unchanged at 6.5 per cent.
In September, the headline inflation accelerated to a seven-month high of 6.46 per cent, while the retail inflation quickened to 9.84 per cent.
The Federation of Indian Export Organisations welcomed the RBI's decision to cut repo rate and said it would augur well for the exports, while asking for slashing rupee credit by 1.0-1.5% in view of the appreciating domestic currency.
Among the Sensex constituents, 20 stocks ended the session in green with HDFC Bank, Titan, Tech Mahindra, and Asian Paints being the major gainers. TCS, Maruti, Kotak Mahindra Bank and Bajaj Finserve were the other gainers. In contrast, SBI, Bharti Airtel, JSW Steel, PowerGrid, ITC and Reliance closed the trading with losses.
The highlights of RBI's bi-monthly monetary policy announced by Governor Shaktikanta Das:
IT majors and Maruti Suzuki down 8% were the top losers among Sensex-30.
The economic growth is likely to moderate to 6.1 per cent, slowest in over seven quarters, from 6.6 per cent last year same period.
Beyond the fourth quarter of 2019, the report does not see space for further cuts primarily as headline inflation is likely to pick up and cross the 4 per cent target by the end of the year, and output gaps are also estimated to close.
Reserve Bank of India Governor Shaktikanta Das on Friday said the central bank will ensure adequate liquidity in the system to ease the financial stress caused by the Covid-19 pandemic. The central bank reduced the reverse repo rate -- the rate at which banks park their fund with the central bank -- by 25 basis points to 3.75 per cent.
As the policy rate has seen a steady increase since May 2022, the percentage of loans offered at interest rates below 8 per cent have declined sharply, dropping from 53 per cent in March 2022 to 18 per cent by June 2023, according to a report by the Reserve Bank of India (RBI). The share of bank loans with interest rates of 10 per cent or higher rose from 22 per cent to 34 per cent during this period, reflecting the impact of a 250 basis point (bps) hike in the policy repo rate by the RBI's Monetary Policy Committee. In response to the rise in repo rate, 32 domestic banks have made corresponding upward revisions to their repo-linked external benchmark-based lending rates (EBLRs), aligning them with the magnitude of the rate hike.
Reserve Bank of India Deputy Governor Rakesh Mohan said on Wednesday that the repo rate would not be cut right now.
Reserve Bank of India Governor Bimal Jalan said on Wednesday that the central bank had a soft and flexible stance on altering the repo rate if monetary conditions warranted.\n\n\n\n
The repo rate, at which the central bank lends to the system, will come down to 5.75 per cent after the cut.
According to the research arm of the country's largest lender State Bank of India, with stability in the currency, the RBI Governor is likely to lower the marginal standing facility rate, at which the RBI lends to the banks, once the lenders exhaust their overnight repo borrowing limits.
Reserve Bank of India cut interest rates for a third time this year.
The Monetary policy committe comprising 6 members voted 6-0 in the favour of the rate cut.
The Reserve Bank of India (RBI) may opt for a 25 per cent cut in the repo rate, to prop sagging demand in the interest rate-sensitive durables sector in the mid-term review of its 2007-08 monetary policy on October 30.The likely reduction in the repo rate would take place despite concerns about inflation, which suggest that interest rates can be left unchanged, banking sources said.
Expressing disappointment over the hike in repo rate by the RBI, India Inc on Friday said a rate cut by the bank would have helped ameliorate sentiments as businesses are "reeling" under a tight liquidity crunch due to high cost of capital.
For over a decade, HDFC Bank consistently outperformed industry growth rates in both deposits and advances, maintaining impeccable asset quality. Amid a landscape where other banks struggled with soaring non-performing assets (NPAs), HDFC Bank thrived, eventually surpassing ICICI Bank to become the largest private sector lender in India. Its net interest margin (NIM) remained stable in the range of 4.1-4.4 per cent.
Most members of the Reserve Bank of India's monetary policy committee (MPC) decided to stick to the course on bringing retail inflation to the target of 4 per cent while voting for maintaining status quo in the April review, except external member Jayanth Varma who voted for a 25 bps cut in the repo rate. "I believe that the extant monetary policy setting is well positioned," RBI governor Shaktikanta Das said in the minutes of the policy review, which came out on Friday. "Monetary policy transmission is continuing and inflation expectations of households are also getting further anchored.
The Reserve Bank of India has no plans to change the repo rate as of now, a senior official told Reuters of Friday.
Reserve Bank on Tuesday kept the bank rate and CRR unchanged, but hiked repo and reverse repo rate by 0.25 per cent to 5.5 per cent and 6.5 per cent respectively as part of measures to rein in inflation.
India's real estate market is poised for growth across categories - residential, commercial, and rental. Currently valued at Rs 24 trillion, or about $300 billion, it is projected to surge to $1.3 trillion by 2034, and then grow further to $5.17 trillion by 2047, indicates a report by the Confederation of Real Estate Developers Associations of India (Credai).
Former Reserve Bank Deputy Governor S S Tarapore on Thursday said that the apex bank should not lower its repo and cash reserve ratio rates in its forthcoming monetary policy review.
'If the majority falls short of expectations, it may prompt initial adjustments in investor sentiment.'
India's central bank kept its key repo lending rate unchanged at 6.75 percent on Tuesday.
Fundraising through qualified institutional placement (QIP) has revived this year, led by commercial banks, after a lacklustre 2022. According to data compiled by Prime Database, Indian companies have raised Rs 53,070 crore in 2023 so far, of which seven banks - Union Bank of India, Indian Bank, Bank of India, Federal Bank, IDFC First Bank, Bank of Maharashtra, and J&K Bank - account for Rs 21,290 crore, or about 40 per cent. If other financial institutions are included, the figure surges to Rs 26,690 crore.
Reserve Bank of India Governor Bimal Jalan said on Friday that there was no proposal to lower the short-term benchmark repo rate now.
CRR remains unchanged at 4%; first repo rate cut since May 2013.
Bond market expects the Reserve Bank of India to cut the repo rate after the government buys back gilt worth over Rs 84,000 crore (Rs 840 billion), hopefully this month.
As far as the Indian households are concerned, although the leverage ratio in this basket has multiplied nearly 3 times in the past decade, it is still well below not just developed but also most other developing economies.
Banking shares are down up to 11% after the Reserve Bank of India has increased the policy repo rate by 25 basis points from 7.25% to 7.5% with immediate effect.
The Reserve Bank on Friday said India is poised to become the growth engine of the world as it retained the GDP projection for the current fiscal at 6.5 per cent. Unveiling the bi-monthly monetary policy review, Reserve Bank of India (RBI) Governor Shaktikanta Das said the domestic economy exhibits resilience on the back of strong demand.
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