'Given the lag in transmission, further softening of lending rates may happen in the coming months.'
The central bank's move will infuse Rs 20,000 crore (Rs 200 billion) into the markets.
The liquidity deficit in the banking system crossed Rs 2 trillion again on Monday, despite the second instalment of cash reserve ratio (CRR) reduction coming into effect from December 28.
The change in stance to neutral from accommodative in the June monetary policy meeting does not necessarily signal that the Reserve Bank of India's (RBI's) rate setting body - monetary policy committee (MPC) - will go on a prolonged pause on rate cuts going forward, believe experts.
Mint Road's proposals on banks' M&A funding are cautious even as entrants root for more elbow room, and weigh business models.
Importers are rushing to hedge their dollar positions amid the sharp depreciation of the rupee against the American currency and expectations of further volatility even as exporters are holding off after suffering mark-to-market (MTM) losses on earlier hedges.
The apex bank hiked its repo, reverse repo (overnight lending and borrowing rates) to 5.25 per cent and 3.75 per cent, respectively, while the cash reserve ratio, or the portion of deposits banks park with RBI, to 6 per cent in line with analysts' expectations.
'They are positioned as defensive products and can potentially give marginally higher returns than liquid funds.'
'The central bank has highlighted that the slowdown in growth has been limited to a few sectors and overall growth is expected to pick up in the second half of the year.'
India Inc, which is sitting on cash balances of 13.5 trillion, is using the funds to meet capital expenditure as well as brownfield expansion, resulting in 'anaemic' demand for bank loans, State Bank of India (SBI) chairman CS Setty said at an event on Monday. He added that a slowdown in corporate credit is mainly due to lack of demand.
The Reserve Bank of India has raised inflation projection to 6.5 per cent with an upside bias by this fiscal end from 5 per cent projected earlier.
The Reserve Bank of India on Friday cut short-term lending rate by 0.25 per cent.
S&P Global Ratings on Tuesday said the Indian economy is set for "resilient growth" in 2025 and projected inflation pressure to recede which will lead to "modest" easing of the monetary policy by the RBI. In its India outlook for 2025, S&P also retained India's growth forecast for current fiscal at 6.8 per cent, followed by 6.9 per cent growth in 2025-26.
The RBI has changed the way it approached supervision in the past. Having seen a couple of collapses in the NBFC sector and the near-collapse of a few banks, it is focusing on regular drills to prevent a fire from breaking out, explains Tamal Bandyopadhyay.
The Reserve Bank of India said it would attempt to bring down inflation from 11-12 per cent to 7 per cent by March, 2009.
The industry also emphasised on supply-side interventions by the government to tackle persistently high food inflation.
The RBI, however, kept other key rates and ratios like repo, reverse repo and cash reserve ratio unchanged.
There are however, enough dovish signals in the governor's statement to indicate a pro-growth policy going forward.
'If it doesn't, it will continue with measures to infuse liquidity, signalling a new cycle,' predicts Tamal Bandyopadhyay.
To ease the potential liquidity stress, the Reserve Bank on Friday slashed Cash Reserve Ratio (CRR) by 50 basis points to 4 per cent, a move that would unlock Rs 1.16 lakh crore bank funds. The RBI on May 4, 2022 had raised CRR to 4.5 per cent from 4 per cent in an off-cycle Monetary Policy Committee (MPC) meeting, with effect from May 21 the same year.
Challenged by unrelenting inflationary pressures, Reserve Bank on Tuesday announced stringent measures of hiking mandatory cash reserve of the banks and its short-term lending rate to them to suck up an estimated Rs 20,000 crore (Rs 200 billion) -- a move that could make loans dearer for housing, car and personal expenses as also to the industry.
Prime Minister's Economic Advisory Council Chairman C Rangarajan on Tuesday called RBI's policy action a "wise decision". The liquidity easing measures will have an impact on interest rates, he said.
While the IT stocks traded firm since the start of the day, the BSE IT index soared to a 10-year high.
Snapping its six-day losing streak both benchmarks rallied over 1% after RBI kept key policy rates unchanged.
The interest rate is the RBI's best bet for keeping the economy close to the 'normality' benchmark.
The Reserve Bank of India (RBI) may not go in for key policy rate cuts in its quarterly policy review slated for January 23, said a senior finance ministry official.
Net profit of 19 listed banks is likely to decline by 4 per cent year-on-year (Y-o-Y) for the quarter ended March (Q4FY25) mainly due to pressure on net interest margins (NIM) as a result of rate cut by the Reserve Bank of India (RBI), according to analysts' estimates. Additionally, loan growth is expected to further slowdown amid low demand in certain secured products, stress in the unsecured segment, and a high cost to deposit (CD) ratio across the system.
The bank kept cash reserve ratio unchanged at 6 per cent.
The central bank held the cash reserve ratio at 4 per cent.
The economists, polled by industry body Federation of Indian Chambers of Commerce and Industry, said the RBI may raise the cash reserve ratio, which is a portion of deposits that banks keep in cash with the central bank, by 50 basis points to 5.5 per cent, although this would have no impact on containing inflation.
What impact will this hike in RBI rates have on the banks and industries? What do the bankers have to say? How is India Inc reacting to the rate change?
Housing demand should improve nationwide after the Reserve Bank of India (RBI) cut the repo rate by a larger-than-expected 50 basis points (bps) on Friday, said real estate industry executives. The rate cut comes after housing sales in top Indian cities in the first quarter of 2025 dipped 28 per cent due to skyrocketing residential property prices and geopolitical headwinds, according to Anarock.
The Reserve Bank of India has launched an assault on inflation by increasing the cash reserve ratio (CRR) 75 basis points to 5.75 per cent. While sounding upbeat on economic growth, the central bank has kept the door open for an increase in interest rates even before the annual policy statement in April.
CRR is the proportion of deposits each bank must keep in the form of cash.
The central bank raised statutory liquidity ratio, the portion of deposits that banks are required to keep in government securities, by 100 basis points to 25 per cent. Other key rates were unchanged.
The Reserve Bank on Friday eased money supply further by cutting key policy rates and ratios - decisions that would among other things infuse Rs 20,000 crore (Rs 200 billion) into the banking system.
Reserve Bank of India said on Thursday it is looking at liquidity, inflation and credit growth to see if it will have to take more steps to tighten monetary conditions.
The Reserve Bank has kept the key policy rates unchanged, while the Cash reserve Ratio (CRR) has been cut by 25 bps to 4.25%.
The Reserve Bank has kept the key policy rates unchanged in its Mid-Quarter Monetary Policy Review.
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