Amid prolonged uncertainty, continued policy support will be crucial for sustained economic recovery from the coronavirus pandemic, Reserve Bank Governor Shaktikanta Das said at the recent meeting of the Monetary Policy Committee. "In this period of prolonged uncertainty, it would be wise to remain agile and respond in a gradual, calibrated and well telegraphed manner to the emerging challenges," opined Das, according to the minutes of the MPC meeting released by the Reserve Bank on Thursday. Observing that economic recovery from the pandemic remains incomplete and uneven, he said, "continued support from various policies remains crucial for a sustained recovery." The governor said the renewed surge in international crude oil prices, however, requires close monitoring.
Fintech companies believe that the impact of Reserve Bank of India's order last week on unsecured loans will be visible in six to 12 months and prompt them to diversify and strengthen their secured portfolio. Fintechs which source funds through banks or non-banking finance companies (NBFCs) are looking at quickly building their secured portfolio options to at least 40 per cent of their total portfolio. "Over the medium to long term, as part of our product strategy, we are evaluating secured products which can be enabled over a digital platform" said Yogi Sadana, the founder of Zype, a lending-focussed fintech.
Headed by Urjit Patel, MPC for the fourth straight time kept the repo rate unchanged, at which it lends to the banks, at 6.25 per cent. The reverse repo, at which RBI borrows, will be 6 per cent.
RBI Governor Shaktikanta Das on Tuesday asked private sector banks to ensure continuity in the provision of various financial services, including credit facilities to individuals and businesses, in the face of challenges brought on by the pandemic. Earlier this month, the governor had held a similar meeting with MD and CEOs of public sector banks. During the meeting with the MD and CEOs of select private sector banks, Das also impressed upon the banks to quickly and swiftly implement the measures announced by the RBI on May 5, 2021, in right earnest.
CRR to remain unchanged at 4.00 pc this fiscal
RBI's latest rate cut will bring down home, car loan's EMI.
An immediate RBI rate cut will lower lending rates for banks' MSME/retail/mortgage loans before the 'busy' industrial season ends in March.
The wholesale inflation rose for the third consecutive month in May at 2.61 per cent on account of rise in prices of food articles, especially vegetables, and manufactured items. The wholesale price index (WPI) based inflation was 1.26 per cent in the previous month. It was (-) 3.61 per cent in May 2023. "Positive rate of inflation in May, 2024 is primarily due to increase in prices of food articles, manufacture of food products, crude petroleum & natural gas, mineral oils, other manufacturing etc," the ministry of commerce & industry said in a statement on Friday.
The Reserve Bank on Friday retained the inflation forecast for 2023-24 at 5.4 per cent, and vowed to take timely measures to prevent any spillovers of global food and fuel price shocks. Stressing that the Reserve Bank has identified high inflation as a major risk to macroeconomic stability and sustainable growth, Governor Shaktikanta Das said the September retail inflation number may be lower than August and July prints. The headline inflation based on Consumer Price Index (CPI) moderated to 4.6 per cent in first quarter of 2023-24 as compared to 7.3 per cent in the same period a year ago.
Credible fiscal consolidation has been a consistent pre-condition to easing the monetary policy stance as far as the RBI is concerned.
The Reserve Bank of India on Wednesday retained the economic growth projection for the current financial year at 10.5 per cent, while cautioning that the recent surge in COVID-19 infections has created uncertainty over the economic growth recovery. In its last policy review, the RBI had projected a GDP growth rate of 10.5 pc for FY'22. Taking various factors into consideration, it said, "the projection of real GDP growth for 2021-22 is retained at 10.5 per cent consisting of 26.2 per cent in Q1, 8.3 per cent in Q2, 5.4 per cent in Q3 and 6.2 per cent in Q4."
The Reserve Bank on Friday retained the real GDP growth projection at 9.5 per cent for 2021-22 as domestic economic activity has started normalising with the ebbing of the second wave of the virus and the phased reopening of the economy. In the June monetary policy, the RBI had lowered the growth projection for 2021-22 to 9.5 per cent from 10.5 per cent estimated earlier. Unveiling the bi-monthly monetary policy, RBI Governor Shaktikanta Dad said high-frequency indicators suggest that consumption (both private and government); investment; and external demand are all on the path of regaining traction.
In the last policy review in December, RBI had decided to keep policy rate unchanged.
Dr Nagesh Kumar, one of the three new MPC members, wanted the MPC to reduce the repo rate by 25 basis points to 6.25%.
Traders will now focus on the RBI's monetary policy review next week which will be key in helping get some clarity on the central bank's thoughts on the outlook for inflation and rates.
At interactions last week with senior officials from the Reserve Bank of India, select banks gave feedback on two key bond market concerns, namely, recent volatility in the rupee-dollar exchange rate and heavy losses incurred on floating rate government bonds due to a demand-supply mismatch, sources told Business Standard. The discussions were held ahead of the RBI's next monetary policy statement, scheduled on August 5. Indian banks are large holders of government securities because of a regulatory mandate to set aside a certain percentage of deposits in sovereign bonds.
Finance Minister P Chidambaram said, "When we return in 2014, we will be more friendly."
A panel has recommended that the RBI should bring down CPI inflation to 4 per cent.
Fitch Ratings on Tuesday retained India's economic growth forecast at 7 per cent for the current fiscal, but cut projections for the next two financial years saying the country is not impervious to global developments. In its December edition of the Global Economic Outlook, Fitch projected India's GDP to grow at 7 per cent in the current fiscal, at a slower rate of 6.2 per cent in 2023-24 and at 6.9 per cent in 2024-25. In September, Fitch projected 7 per cent growth for the current fiscal, followed by 6.7 per cent in 2023-24 and 7.1 per cent growth in 2024-25.
In its Fifth Bi-monthly Monetary Policy Statement, 2017-18, RBI said the second quarter growth was lower than the one that was projected in the October review, and the recent increase in oil prices may have a negative impact on margins of firms and Gross Value Added (GVA) growth.
Flush liquidity, apart from softening short-term money market rates, poses inflationary risks.
In policy review meet in June, RBI Governor Raghuram Rajan kept interest rates intact.
CPI inflation will remain below the target of 6 per cent set for January 2016.
The six-member monetary policy committee voted 5:1 for the decision, with only Ravindra Dholakia voting for a 0.25 per cent reduction in rates.
"Finance Ministry and RBI keep talking all the time," Rajan said.
So for the time being, consumers need not worry about their EMIs on home loans, auto loans etc. going up. However, as April progresses the scenario could change.
Given the pressure from India Inc and the banking fraternity, it is surmised that the portfolio rejig will take place before April.
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Markets ended tad lower with financials declining the most ahead of RBI policy review tomorrow.
Reserve Bank of India (RBI) Governor Shaktikanta Das said on Friday said the central bank has developed an innovative artificial intelligence and machine learning (AI/ML) based model MuleHunter.ai to address the growing issue of mule bank accounts that are often used for committing financial fraud. Developed by the Reserve Bank Innovation Hub, the new initiative is piloted with two public sector banks.
RBI Governor Duvvuri Subbarao on Tuesday defended the bank's decision to keep the key policy rate unchanged saying inflation could rise to above 8 per cent in the near-term.
This is the fifth straight cut in rates by the Reserve Bank of India in as much policy reviews in 2019, and takes the total quantum of reductions to 1.35 per cent.
Reserve Bank will have to constantly re-assess the "dynamic and fast changing situation" and tailor its actions accordingly, Governor Shaktikanta Das said during the recent meeting of the Monetary Policy Committee (MPC) which decided to maintain status quo on key interest rate. According to the minutes of the six-member MPC meet released by Reserve Bank of India (RBI) on Friday, the five other members had also expressed a similar opinion amid the ongoing Russia-Ukraine conflict's impact on the global and domestic economies. MPC, which held its meeting from April 6-8, unanimously decided to keep the borrowing costs unchanged at a record low for the 11th time in a row in a bid to continue supporting economic growth despite inflation edging higher in the aftermath of Russia-Ukraine conflict.
The Reserve Bank of India on Friday decided to leave benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance as the economy faces heat of the second Covid wave.
The Reserve Bank on Friday retained the GDP forecast for the current financial year at 9.5 per cent and flagged global semiconductor shortages, elevated commodity prices and potential global financial market volatility as downside risks to economic growth. In his address after the three-day meeting of the rate-setting panel, RBI Governor Shaktikanta Das said recovery in aggregate demand gathered pace in August-September, and it is reflected in high-frequency indicators, like railway freight traffic; port cargo; cement production; electricity demand; e-way bills; GST and toll collections. "The ebbing of infections, together with improving consumer confidence, has been supporting private consumption," he said, and added the pent-up demand and the festival season should give further fillip to urban demand in the second half of the financial year.
The RBI, which started exiting its easy money policy stance since October last, is widely expected to hike key short-term lending (repo) and borrowing rates (reverse repo) by 0.25 per cent at its quarterly policy review on July 27.
Analysts and economists say that it is too early to expect anything dramatic on the interest rate regime despite the recent reform measures.
Reserve Bank Governor Shaktikanta Das on Wednesday said the country is at the doorstep of economic revival on the back of accommodative monetary and fiscal policies being pursued by the central bank and the government.
In the light of credit offtake not picking up despite ample liquidity in the system, the RBI is likely to keep policy rates unchanged in its annual monetary policy, to be unveiled on Tuesday, but may impress upon banks to step up lending to sectors slowing down.
WPI-based inflation falls to 5-month low of 6.16%.
These are the highlights of RBI Governor Shaktikanta Das's statement and resolution of the Monetary Policy Committee (MPC):
