Most say a rate cut could come in RBI's June policy.
There's need to address growth, but weak rupee putting pressure on prices.
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.
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.
The non-food component in the price basket will continue to keep inflation at a high level and result in a "long pause" in interest rates, a foreign bank said on Wednesday. The central bank is likely to pare the pandemic-driven emergency response as well, the report by Singaporean lender DBS said. It can be noted that the high inflation driven by the food prices has forced the RBI to go for a status quo in rates for the three consecutive reviews of the bi-monthly policy meetings, even as growth continues to be in the negative territory.
RBI likely to cut rate early next year.
The Reserve Bank is unlikely to lower the interest rates.
'The assumed linear correlation between forced lower yields, higher bank borrowing from the RBI, higher lending, and higher growth involves leaps of faith, each a step on the quicksand of false beliefs,' warns Debashis Basu.
Tuesday's policy announcement had a regulatory and development component.
The RBI's projections for consumer inflation over the rest of the year indicate some acceleration, with the rate reaching eight per cent in its baseline scenario.
Head of state-run Indian Bank T M Bhasin had called for a CRR cut.
Bank Nifty pared all its intraday gains to end over 1% lower led by losses in BoB, ICICI Bank, Axis Bank and Bank of India
Based on the current momentum, the funds likely to be raised through the RBI's relaxed window would be $3.5 billion-$4 billion.
Real estate loans could become NPAs for banks.
For over a decade, HDFC Bank consistently outperformed industry growth rates in both deposits and advances, maintaining impeccable asset quality. Amid a landscape where other banks struggled with soaring non-performing assets (NPAs), HDFC Bank thrived, eventually surpassing ICICI Bank to become the largest private sector lender in India. Its net interest margin (NIM) remained stable in the range of 4.1-4.4 per cent.
Investors' confidence has been revived in recent weeks on the likelihood the elections will usher in a new government.
On the individual front, housing loan rebate on self-occupied property was increased from Rs 1,50,000 to Rs 2,00,000.
'RBI is already late in addressing inflation pressures.'
.jpg)
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.
The Reserve Bank on Friday superseded the board of the city-based Abhyudaya Cooperative Bank on concerns emanating from "poor governance" and appointed an administrator to manage the affairs of the lender. In what can be seen as a step that should allay depositors' concerns, the central bank did not put any restrictions or moratorium on deposit withdrawals because of the comfort it gets on the bank's finances, according to people in the know. "(The) action is necessitated due to certain material concerns emanating from poor governance standards observed in the bank.
Observing that MSME sector plays an important role in the growth of the Indian economy, RBI said the restructuring of the borrower account has been extended by further one year to March 31, 2021.
State Bank of India (SBI) may carry out a planned Rs 10,000 crore sale of infrastructure bonds in the market this week, with the securities likely to be of 15-year maturity, sources told Business Standard. SBI, the country's largest bank, had last week said its board had approved the issuance of infrastructure bonds in the current fiscal year. It, however, had not mentioned the maturity of the bonds or when the sale would take place.
RBI, in its first bi-monthly monetary policy statement, left the short-term lending rate, or repo rate, unchanged at 8 per cent and the cash reserve ratio static at 4 per cent.
According to Soumya Kanti Ghosh, chief economic advisor of the State Bank of India group, a 50 bps rate cut is a possibility, but 25 bps is more likely.
An action on the rate front is unlikely to figure in Rajan's plan for the moment.
HDFC Bank on Monday reported a consolidated net profit of Rs 16,811 crore for the September quarter, its maiden quarterly earnings announcement after merging parent HDFC with itself. On a standalone basis, the largest private sector lender reported a net profit of Rs 15,976 crore. In the year-ago period, the net profit of the merged entity would have been Rs 11,162 crore on a consolidated level while the same on a standalone basis would have been Rs 10,606 crore.
Leeway on CRR and SLR was a long-standing demand from banks, which the RBI did not agree to till recently.
Investors looking for a fixed-income product that is free of credit risk may invest in these bonds.
RBI has cut the rates thrice so far in 2015 by 25 bps each.
Hawkish tone likely to guard rupee from further slide
HDFC Bank expects to amalgamate its home loan major parent HDFC into itself by September next year, a top official said on Friday. Both HDFC and HDFC Bank held general meetings on Friday to seek shareholder approvals for what is billed as the largest merger in Indian corporate history at over $40 billion. At the time of announcing the merger on April 4 this year, the entities had said the merger will take 12-18 months.
.jpg)
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.
The RBI is expected to cut rates in next policy.
Reserve Bank of India Governor Shaktikanta Das on Friday said the central bank will ensure adequate liquidity in the system to ease the financial stress caused by the Covid-19 pandemic. The central bank reduced the reverse repo rate -- the rate at which banks park their fund with the central bank -- by 25 basis points to 3.75 per cent.
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.
Only borrow an amount that can be repaid comfortably. The ratio of total EMI to take-home salary should not exceed 40 per cent.
RBI Governor Raghuram Rajan asked banks to follow suit and pass on the rate cuts.
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.
RBI seen cutting repo rate 25 bps on Sept 29, says a poll
The specifics will also cover what's fit and proper to be a chest manager; the insurance and re-insurance aspects; and the new capital threshold, which is Rs 100 crore now.
