Weakness in HDFC Bank's net interest margin (NIM) might have bottomed out in the July-September quarter (Q2-FY24), analysts said on Tuesday, as most of the merger-related one-time adjustments have been done. The bank, they believe, should be able to grow from here on, allowing the stock to reverse its underperformance. "The weak NIM print was not unexpected given the merger and regulatory impact caused by the incremental cash reserve ratio (ICRR; 5-10 bps for the quarter).
The Reserve Bank of India has kept the key short term lending rate (repo rate) unchanged at 7.25%.
Reserve Bank of India (RBI) Governor Shaktikanta Das had stumped the market in the previous two policies - in August and in October - first with action and then with words. In August, it was the introduction of an incremental cash reserve ratio (I-CRR) to take out excess liquidity, which took the markets by surprise. In October, there was no action. Rather, what is known as "open mouth operation", Das' comment that the central bank might conduct open market operations (OMOs) by selling bonds tempered the euphoria in the bond markets after JP Morgan's inclusion of India in its Emerging Market Bond Index.
Benchmark policy rate unchanged at 6.75 per cent.
The liquidity in the banking system could ease in the coming week due to an increase in government spending - a development that would be the key for the Reserve Bank of India (RBI) to decide whether to extend the incremental cash reserve ratio (I-CRR) mandate for banks. There are signs of improvement in the liquidity scenario as banks parked Rs 25, 833 crore with the RBI on Thursday. Market participants expect liquidity to gradually improve by the end of the month or during the first week of September, aided by government spending.
If you pledge market-linked instruments and their value plummets, you will have to provide additional collateral, points out Sanjay Kumar Singh.
The Monetary policy committe comprising 6 members voted 6-0 in the favour of the rate cut.
The Reserve Bank of India on Thursday decided to keep policy rate unchanged for third time in a row as it maintains heightened vigil on inflation. The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022.
The Reserve Bank of India (RBI) is likely to keep monetary policy steady in June despite sluggish economic activity as inflation remains elevated, a Reuters poll showed on Wednesday.
The Reserve Bank of India (RBI) on Monday directed banks and non-banking financial companies (NBFCs) offering gold loans to thoroughly review their policies, processes, and practices to identify any gaps. The central bank also told them to closely monitoring their gold loan portfolios amid significant growth observed in this segment vis--vis some lenders. Additionally, the RBI, through a circular, instructed these lenders to ensure adequate controls over outsourced activities and third-party service providers.
According to fund managers, expectations of a 25-basis-point increase in the cash reserve ratio of banks have heightened in the wake of RBI's surprise twin moves to make short-term money dearer as part of its attempts to curb the rupee's volatility.
When banks deposit their money with RBI, the central bank offers government securities of equal value. But now, it could be running out of enough securities to offer banks against the overnight deposits.
Weighed down by a weak rupee, the Reserve Bank on Tuesday chose to keep all key interest rates unchanged and asked the government to take urgent steps to reign in the high current account deficit.
Only borrow an amount that can be repaid comfortably. The ratio of total EMI to take-home salary should not exceed 40 per cent.
The broader Nifty also slipped from record by falling 33.15 points at 10,081.50 as investors booked profits.
Talks of a merger between HDFC Bank and parent HDFC Ltd had gained steam nearly eight years ago, when the Reserve Bank of India allowed banks to issue long-term bonds to fund infrastructure and affordable housing. At that time, key executives at both entities denied any such proposal. And today, the merger has been officially announced by the two players.
Head of state-run Indian Bank T M Bhasin had called for a CRR cut.
In view of the rising number of mobile and internet banking users, the Reserve Bank of India (RBI) has proposed to tighten norms related to the liquidity coverage ratio (LCR) by increasing the run-off factor for retail deposits. "Banking has undergone rapid transformation in recent years. "While increased usage of technology has facilitated the ability to make instantaneous bank transfers and withdrawals, it has also led to a concomitant increase in risks, requiring proactive management," the RBI said in the draft guidelines released on Thursday.
Mortgage lender HDFC Ltd on Wednesday announced an increase in its benchmark lending rate by 5 basis points (bps), a move that will make loans dearer for both existing and new borrowers. This is the third hike effected by HDFC in the last one month. "HDFC increases its Retail Prime Lending Rate (RPLR) on housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 5 basis points, with effect from June 1, 2022," the housing finance company said in a statement.
Between March 2022 and September 2023, HDFC Bank added 56,310 employees.
RBI has cut policy rate thrice during 2015.
Of the 52 economists polled, 50 expect the policy repo rate to remain at 7.25 per cent, and 47 of 48 respondents see the cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, unchanged at 4 per cent.
CRR to remain unchanged at 4.00 pc this fiscal
RBI had previously cut repo rate by 0.25 per cent each in January and March.
Based on the current momentum, the funds likely to be raised through the RBI's relaxed window would be $3.5 billion-$4 billion.
In a mixed bag for HDFC Bank ahead of the parent HDFC's merger with itself, the Reserve Bank of India has declined to make exceptions on certain aspects, and has offered some leeway on others. The country's largest private sector lender, which is aiming to conclude the merger with the home finance major by July, had written to the central bank seeking certain forbearances after announcing the $40-billion merger in April last year. In an exchange filing this evening, HDFC Bank said it received a response from RBI on Thursday and also said that there are a few pending issues.
An action on the rate front is unlikely to figure in Rajan's plan for the moment.
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Currently, the cash reserve ratio is pegged at a low of 4 per cent, while statutory liquidity ratio that includes securities such as government bonds, stands at 23 per cent, down from 25 per cent in 2010.
Retail depositors are earning negative returns on their bank deposits and hence, there is a need for reviewing taxes on interest earned, economists at the country's largest lender SBI have said. If not for all the depositors, the taxation review should be carried out for at least the deposits made by senior citizens who depend on the interest for their daily needs, the economists led by Soumya Kanti Ghosh said in a note, which pegged the overall retail deposits in the system at Rs 102 lakh crore. At present, banks deduct tax at source at the time of crediting interest income of over Rs 40,000 for all the depositors, while for senior citizens the taxes set-in if the income exceeds Rs 50,000 per year.
Bond markets, global as well as domestic, are likely headed towards hard times over the next three to six months, as higher vegetable prices, rising fuel costs, and improved wages may keep inflation hot, believe analysts, who expect the yields to hit 7.5 per cent in the near-term from the current 7.234 per cent. In this backdrop, they suggest investors can put in money in funds/instruments with residual maturity of 4 to 6 years, while longer-term investors can allocate cautiously to the longer end in the range beyond 7 years.
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Chidambaram further said government has taken a number of fiscal and administrative measures from time to time to contain inflation especially food.
The cut in the policy rate by RBI will help lower interest rates
The Reserve Bank Officers Cooperative Credit Society, which caters to the credit needs of RBI officers posted all over India, has a fixed deposit of Rs 105 crore in the bank on which the RBI has placed various curbs for six months following revelations of irregularities.
The RBI's surprise rate hike may have been prompted by its inability to convince the government to cut excise duty on petrol and diesel and take other supply-side measures to tame runaway inflation, sources aware of the central bank's thinking said on Thursday. There has been a record Rs 10 a litre increase in petrol and diesel prices in a matter of 16 days beginning March 22, which has further fuelled the already high commodity prices. The RBI, which is mandated to ensure inflation is under 6 per cent, acted with a 0.40 per cent increase in repo rate to check prices before they went completely out of hand.
Interest rate on fixed deposits between 7-179 days has been reduced to 7 per cent from 7.5 per cent, SBI said in a statement.
India should convert the Trump threat to an India opportunity, re-embracing a more liberal trade regime as a way of reviving manufacturing output and exports.
The additional measures to check exchange rate volatility comes within 10 days of RBI taking stern steps to suck out liquidity from the system.
All categories of NRI deposits saw net inflows in July.
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The worst performing Asian currency of the year so far hit a new life low of 61.80 rupees per dollar on Tuesday, breezing past a previous low of 61.21 hit on July 8. Central bank intervention helped the rupee recover, but by Wednesday it was sliding once again, to stand around 61.41 by 1.30 p.m.
