Rajan said that despite easy liquidity, banks have passed rate cuts into lending rates modestly.
'ESG is actually a concept which cannot be applied effectively in the very short run.'
The Bill provides comprehensive legislation to prohibit unregulated deposits, with punishment for those promoting such schemes or defaulting on repayment.
By no means do economists see the Reserve Bank of India stop at just a 25-bp cut. Some of the economists such as Soumyakanti Ghosh of State Bank of India are of the firm view that rates have room to fall by a total of 75 bps in the current financial year, starting with 25 bps in the August 7 policy.
Meanwhile, RBI Governor Raghuram Rajan said at the meeting that the central bank brass discussed strengthening the state- level coordination committees so that unauthorised deposit taking can be dealt with in a better way.
Banks are preferring instruments with higher premium over government securities for their held-till-maturity (HTM) portfolio, following the new investment norms, which came into effect from April 1. They are stocking up on corporate bonds and state government securities to boost yield on their portfolio, according to market participants. "Definitely, if there is a good spread available and without lower credit risk, those instruments will be favoured to boost the yield on the portfolio.
The Reserve Bank of India (RBI) on Wednesday announced to increase the policy repo rate by 50 basis points to 4.9 per cent, the second hike in five weeks aimed at quelling the inflation. The MPC vote was unanimous and has decided to keep stance withdrawal from accommodative, RBI Governor Shaktikanta Das said in a press conference on Wednesday. The decision was taken during a three-day meeting of the RBI's Monetary Policy Committee (MPC) to review the interest rates in the country. The MPC voted unanimously to increase the policy repo rate by 50 bps to 4.90 per cent," Das said.
The central bank has, so far, cut its repo rate by 125 bps.
Reserve Bank Governor Shaktikanta Das on Wednesday said underlying economic activity in India continues to be strong, but external factors will cause some "dent" to the economy. Speaking at the BFSI Insight Summit 2022 organised by Business Standard, Das said the RBI tracks 70 fast moving indicators and most of them are in the "green box". It is the external sector, mired by a fear of recession or clear visibility about slowing growth in a large part of the world, where the challenges lie, he said, adding that the impact of external demand will "dent" the economy.
The economists, who were surveyed, also felt it will take time for banks to make any further reduction in deposit rates
'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.'
RBI wants the lending rates to be determined by the market.
The RBI was not party to the decision to demonetize 500 and 1,000-rupee notes, which was taken at the highest level of India's political leadership.
Finance Minister Nirmala Sitharaman on Saturday reviewed the performance of public sector banks (PSBs) on various financial health parameters and their resilience in the wake of the current global financial scenario emanating from the failure of some international banks in the US and Europe.
'If because of El Nino, the monsoon is affected adversely in the current year, naturally it will affect income projections and consequently Budget numbers.'
New norms are in place to strengthen regulations for this set of lenders which has been playing a critical role in Asia's third largest economy, notes Tamal Bandyopadhyay.
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.
Finance Minister Nirmala Sitharaman on Saturday said the new tax regime will benefit the middle class as it will leave more money in their hands. Talking to reporters after the customary post-Budget address to the central board of the RBI, she said it is not necessary to induce individuals to invest through government schemes but give them an opportunity to make a personal decision regarding investments. "...the way we allowed for standard deduction and also the rates which have been fixed, tax rates which have been fixed for different slabs, it has actually left more money in the hands of the people, the taxpayer, the household," she said.
Currently, banks follow system of internal benchmarks, including Prime Lending Rate, Benchmark Prime Lending Rate, Base rate and Marginal Cost of Funds based Lending Rate.
The message is clear: The 60-year-old wise uncles need to handhold the 40-year-old entrepreneurs when, obsessed with ambition and greed for growth, they become a victim of hubris, points out Tamal Bandyopadhyay.
Reserve Bank of India Governor Shaktikanta Das tells Anup Roy, Raghu Mohan and Niraj Bhatt that it is time for banks to lower interest rates and start lending to cash-starved finance companies after due credit appraisal and proper risk assessment.
A comprehensive technical framework needed, from which a more convincing policy could be demonstrated
Funds parked by Indian individuals and firms in Swiss banks, including through India-based branches and other financial institutions, jumped to a 14-year-high of 3.83 billion Swiss francs (over Rs 30,500 crore) in 2021 on a sharp surge in holdings via securities and similar instruments while customer deposits rose as well, annual data from Switzerland's central bank showed on Thursday.
RBI Governor Shaktikanta Das kept the red flag on cryptocurrencies flying, warning that the next financial crisis can be triggered by private cryptocurrencies if such speculative instruments are allowed to grow.
The Reserve Bank on Friday took steps towards normalisation of liquidity management to pre-pandemic levels, with the introduction of the standing deposit facility (SDF) as the basic tool to absorb excess liquidity, and narrowing the liquidity adjustment facility (LAF) to 0.50 per cent from the 0.90 per cent. Governor Shaktikanta Das said the SDF will be at 3.75 per cent, 0.25 per cent below the repo rate and 0.50 per cent lower than the marginal standing facility (MSF) which helps the banks with funds when required. The SDF has its origins in a 2018 amendment to the RBI Act and is an additional tool for absorbing liquidity without any collateral.
RBI is expected to discuss about the impact of GST in its monetary policy.
'We don't know how much the Pay Commission outflow will be.'
The RBI has made serious attempts to improve fiscal deficit.
Is the worst over for Indian banks? The past two years saw them ride on treasury trades as deposits soared and credit growth dipped sharply. Gross and net non-performing assets (NPAs) moved south, and the provision coverage ratio (PCR), capital buffers, and profitability indicators are back at pre-pandemic levels. So, what's the plot ahead?
From liquidity, monetary policy operations to financial inclusion, know about RBI monetary policy
Public sector banks have raked in more profits in the three months ended June on the back of a persistent decline in bad loans and the trend may have a positive bearing on their balance sheets in the coming quarters. In the June quarter, Bank of Maharashtra (BoM) and State Bank of India (SBI) were in the lowest quartile as far as Gross Non Performing Assets (NPAs) and net NPAs were concerned, according to an analysis of the quarterly financial numbers published by the public sector lenders. Cumulatively, all the 12 public sector banks reported a profit of about Rs 15,306 crore in the three months ended June, registering an annual growth of 9.2 per cent. However, leading public sector lenders -- SBI and PNB -- posted lower profits in the June quarter.
Mutual funds, bonds, PPFs, equity and real estate are some options which offer varying rates of return.
'The Budget has maintained fiscal prudence while announcing a number of steps to boost growth, particularly in infrastructure and rural sectors.'
Banks are in need of government support to manage the stressed assets
"The poor will not suffer disproportionately due to bouts of sharp inflation, and the middle class will not see its savings eroded," Raghuram Rajan said.
Could it have been more reformist? Of course, but this is an election year Budget, observes Akash Prakash.
Despite strong AUM growth, MFs lag behind other popular investment avenues. MFs received only 6 per cent of total household savings in 2021-2022.
'Decide on an asset allocation you are comfortable with and stick to it for the long term.'
A staunch defender of demonetisation, it would be interesting to see how he handles the government's increasing demand for more cash from the RBI, and letting some weak banks get out of prompt corrective action.
The Urjit Patel committee on monetary policy framework has proposed setting up of a monetary policy committee (MPC) that will be headed by the Reserve Bank of India (RBI) governor and accountable for achieving inflation target set by it.
