Despite no change in interest rates, India's largest lender, State Bank of India, last week became among the latest to lower deposit rates, often a precursor to lower lending rates, something some banks have already done for certain consumer loans.
American brokerage BofA Securities on Friday said the Indian economy continues to be "weak", pointing to activity indicators tracked by it. On the positive side, the brokerage said credit demand is bottoming out and the real lending rates adjusted for wholesale price inflation are falling. It can be noted that there has been a slew of reports lately about a stronger recovery being underway after the jolt caused by the pandemic.
'Credit expansion is probably the quickest way to get the economy going again.' 'Easy credit is like a shot of nitro in a race car: In timely, small, quick, doses it can give a tremendous boost but carried to extreme it can destroy the engine,' points out S Muralidharan, former managing director, BNP Paribas.
'This is for the first time home loan rates have dropped below 7 per cent,' notes Tamal Bandyopadhyay.
As PM talks of lower lending rates, housing companies prepare to cash in.
Rbi cut rates for teh third time to ease economic situation.
The recent spate of rate reductions is among the sharpest in one shot since the cuts that followed the 2008 financial crisis
Deloitte India on Friday said it estimates India's GDP growth at 6.6 per cent in the current fiscal helped by consumption expenditure, exports rebound and capital flows. In its India's economic outlook report, Deloitte said the rapid growth of the middle-income class has led to rising purchasing power and even created demand for premium luxury products and services. With the expectation that the number of middle-to-high-income segments will be one in two households by 2030/31, up from one in four currently, we believe this trend will likely become further amplified, driving overall private consumer expenditure growth, it said.
Consumer food price inflation eased to 6.14%.
The interest rate on FDs hasn't changed much over the years.
Will demonetisation lead to a rate cut, leading to higher quantum of lending?
'Opportunity is there in each segment of the market. There is opportunity in affordable and specifically governed by government initiatives as well as for housing for all.'
If you have availed a home loan from an NBFC, you can shift your existing home loan to a bank and benefit from the MCLR regime, suggests Ratan Choudhary, head - home loans, Paisabazaar.com.
While Prime Minister Modi grapples with serious matters of State so very successfully, may I urge that he focus just a bit of attention on the economy, says Manoj Mohanka.
Meanwhile, for the fortnight ended March 20, deposits grew 11.42% y-o-y.
The Reserve Bank will go for a "dovish pause" at Wednesday's policy review announcement amid developments such as a rise in inflation, government maintaining the inflation target band and a likely impact on growth due to local lockdowns on rising COVID-19 infections, analysts said on Monday. Economists at American brokerage Bofa Securities said price stability, growth and financial stability will become the prime focus areas for the central bank going forward. "The RBI MPC (Monetary Policy Committee) should deliver another dovish pause on Wednesday," it said. The policy announcement, the first for the fiscal, will come days after the government maintained the RBI's target to ensure inflation to be within 2-6 per cent band for five more years.
Of the eight RBI governors who have held office since the 1991 economic liberalisation, Bimal Jalan had the longest stint and S Venkitaramanan, the shortest. Current Governor Shaktikanta Das will overtake Bimal Jalan before completing his second term in December, points out Tamal Bandyopadhyay.
The RBI is expected to cut rates in next policy.
The meeting between Cabinet secretary K M Chandrasekhar and heads of banks along with representatives of chambers will be held at a time when almost 50 per cent of PSU banks have reduced their benchmark lending rates effective from Thursday. Prime Minister Manmohan Singh had said there is scope for further cuts in interest rates in his meeting with industrialists last week.
Even if Mudra steps in to play its main role of refinancing at some stage, the responsibility for the bad loans remains with the banks.
RBI raised lending rates to commercial banks 2 per cent to 10.25 per cent making loans costlier.
Most bankers say they will look at reducing deposit rates from April.
New Delhi has a chance to rid itself of its image as the bully in the subcontinent by helping a neighbour tackle problems that India, for once, has no role in creating. It should grab the opportunity with both hands, suggests Aditi Phadnis.
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Banking as we know it will stand on its head in the next 10 years.
By evaluating their loan rate against the best available every year, borrowers can achieve considerable savings over the entire tenor, suggests Sanjay Kumar Singh.
The evolving RBI-government relationship, a reversal in the interest rate cycle and return to profitability will dominate bankers' conversation this year, says Tamal Bandyopadhyay.
Banks are expected to cut lending rates from April 1.
Out of the total amount, Rs 17,359.77 crore is aircraft loan, while Rs 31,517.04 crore is working capital loan.
'With a solid investment programme and sustainable development strategy, India can exceed 7 per cent growth per year, or a doubling of high-quality national income within a decade.'
One can expect significant changes at India's banks in ensuing months.
A rate cut will bring positive sentiment around the Budget.
Gross non-performing assets of public sector banks have gone up.
'The slide in growth has arisen primarily because we have an NBFC crisis on top of a banking crisis,' points out T T Ram Mohan.
RBI's intention to keep its target inflation rate at 5% was the main reason behind keeping rates unchanged, says Adhil Shetty, CEO of BankBazaar.com.
Finance minister Nirmala Sitharaman on Wednesday exuded confidence that inflation would further decline and the government is on track to meet its budgetary target for deficit and said that there is no fear of stagflation in India. Replying to the debate on first batch of Supplementary Demands for Grants 2022-23 in Lok Sabha, the finance minister said inflation has come down and it is now in the tolerable band of the RBI. Inflation has been declining since April 2022 and it is declining further, she said.
Home loans also pose lower bad-debt risks for the banks than corporate loans.
'China's investment destination image the world over has taken a beating, therefore investors feel India is a safe haven for investments.' 'FDI is at an all-time high in India.' 'Now after such poor ratings, this FDI amount will fall.' 'Therefore, I am saying these things are happening at China's behest.'
Budget for women and children welfare increased from Rs 1,56,528 crores to Rs 1,84,632 crores for 2017-18
'The focus needs to shift towards the ability to collect payments, particularly in tier-3 to tier-4 areas where acceptance is still lacking.'
Indian banks have started exploring opportunities in the space, including lending to crypto exchanges, and accepting bitcoins as collateral, among others.
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