The Reserve Bank of India (RBI) on Friday kept key repo rate unchanged at 4 per cent in view of rising inflation and faint signs of economic growth amid gradual lifting of coronavirus (COVID-19) lockdown. The central bank's newly-constituted monetary policy committee (MPC) began its three-day meeting on October 7 and maintained the stance as accommodative. It also kept the reverse repo rate unchanged at 3.35 per cent.
The RBI is fully aware that the high-cost loans and high indebtedness of the borrowers could pose financial stability risks, if not addressed by these NBFCs. Governor Shaktikanta Das has issued a stern warning, saying the RBI is closely monitoring these areas and will not hesitate to take appropriate action, if necessary, if the culprits don't opt for self-correction. Watch out for some action, soon, notes Tamal Bandyopadhyay.
'We never waste a crisis. There will be learning and the supervisory tools will get better with each episode.'
Short-term lending (Repo) rate is unchanged at 8 per cent.
Benchmark policy rate unchanged at 6.75 per cent.
The RBI has cut key rates to boost the economy.
Next bi-monthly policy statement on September 30.
Short-term lending rate unchanged at 7.75 pc.
This Statement consists of two parts: Part I. Annual Statement on Monetary Policy for the Year 2007-08; and Part II. Annual Statement on Developmental and Regulatory Policies for the Year 2007-08.
The central bank kept cash reserve ratio unchanged at 4 per cent.
Amid expectations that the Reserve Bank may keep its monetary stance unchanged, the central bank will come out with its second quarter review of the credit policy for the current fiscal on October 27.
Baby steps are pleasing to see, but when it comes to policy-making, one has to see where they go. Policy statements rarely provide the specific rationale for the proposed "baby steps". Economists, who see "baby steps" as "interest rate smoothening", infer a rationale for such actions in a variety of ways, as for example from the minutes of the policy meetings where they are made available.
These are the highlights of the seventh bi-monthly monetary policy statement for 2019-20 by the RBI amid COVID-19 pandemic:
This is the fourth consecutive time that the RBI has kept key interest rates unchanged despite clamours from the industry to cut rates to boost economy.
The fund said oil prices are still at double the levels recorded in end-2006, even after the 40 per cent fall in prices from the peak they reached in July this year. Food prices too are still above end-2006 levels. Because of this, fuel importing low-income countries will see their import bill increase by 3.2 per cent of their GDP, while food importing countries will spend additional amount equivalent to 0.8 per cent of GDP on food.
Markets will look for clear guidance on how the MPC interprets the uncertainty and what it implies for the future course of monetary policy, points out Rajeswari Sengupta.
Inflation to peak in the current quarter within tolerance band, moderating in the second half of next fiscal, says central bank.
Subbarao's annual statement will be of unusual interest this year
The central bank was widely expected to maintain status quo.
The RBI has set up a panel to review ATM charges, and fees levied by banks.
This time the all-powerful interest-rate setting panel, whose constitution was notified by the government on Thursday, will take call on interest rate. But that's not the only change. The Reserve Bank of India has also decided to change the timing of announcement of its policy review, due next Tuesday, to mid-afternoon.
Following are the highlights of the RBI's first monetary policy statement of 2022-23 unveiled by Governor Shaktikanta Das: Policy repo rate unchanged at 4%; marginal standing facility rate & bank rate too remain unchanged at 4.25%. Monetary stance to be accommodative with focus on withdrawal of accommodation to keep inflation within target. GDP growth projection for FY'23 slashed to 7.2% from 7.8%; growth projections based on assumption of crude oil (Indian basket) price at $100 a barrel during FY'23. Inflation forecast hiked to 5.7% for FY'23 from 4.5%.
The Delhi government's Health Department has received an audit report highlighting alleged financial and administrative irregularities within the Delhi Medical Council (DMC) between 2019 and 2025.
Reserve Bank Governor Sanjay Malhotra on Friday said the key policy rates will remain at low levels for a long period and may go down even further.
The University of Chicago has conferred its Alumni Award for Professional Achievement to India's former chief economic adviser Krishnamurthy V Subramanian, the first Indian economist to receive the honour since 1941.
The central bank is yet to consider actions such as a rate hike or mobilising dollar inflows from non-resident Indians to boost forex reserves as it cannot afford to continue with them for long when the rupee's internationalisation tops its agenda, explains Tamal Bandyopadhyay.
"It is heartening to note that the RBI has chosen growth over monetary tightening and inflationary fears," FICCI president Harsh Pati Singhania said.
The RBI's bi-monthly policy review on June 3 will be the first after Prime Minister Narendra Modi assumed office on May 26.
India's wholesale price inflation surged to 3.88 per cent in March, marking the fifth consecutive monthly increase, primarily driven by a sharp rise in crude petroleum, natural gas, and manufactured items amidst the West Asia crisis.
The bank chiefs have also cancelled the customary media conference after the bi-annual policies.
India's wholesale price inflation (WPI) increased for the fourth consecutive month in February, reaching 2.13 per cent, primarily due to rising prices of food and manufactured goods, according to government data.
The Reserve Bank of India (RBI) has proposed new measures to combat financial fraud in digital payments, including lagged credit for authorised push payments and a 'kill switch' for users to disable all digital transactions.
With inflation turning negative, industry has been demanding interest rate cuts to propel demand. However, RBI Governor D Subbarao had said there is no threat of deflation as food and crude oil prices are still firm.
'When there is such an elaborate and a strong process, one would have expected anyone to either place the issues so that they can be addressed or go to the regulator and probably tell them rather than creating a kind of uncertainty for the stakeholders.
RBI Governor flayed easy monetary policy of central banks in advanced economies saying it is "more cause than medicine".
'Given the lag in transmission, further softening of lending rates may happen in the coming months.'
While the economy will wait for a rate cut in December, the banking industry should be happy with the wave of liberalisation -- a big push for growth in bank credit, points out Tamal Bandyopadhyay.
Sanjay Malhotra has made structural changes to banking regulation to bring down costs and increase efficiency. Plus, he kicked off a benign interest regime. But there are challenges ahead.
Reserve Bank Governor Sanjay Malhotra on Friday said the central bank does not target any band for the rupee in the forex market, and allows the domestic currency to find its own correct level.
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