'When you need to revive the economy, when you need to revive aggregate demand, you cut taxes.' 'But what's this government doing?' 'It's increasing taxes for the middle class and the vast majority of the poor on fuel, which has a ratchet effect on most other products.'
The unexpected interest rate hike by the RBI on Wednesday will have the banking system on average making a 10-15 bps gains on the yields, with private banks making larger gains as 57 per cent of their loans are linked to external benchmark rate and 40 per cent to the marginal cost of lending rates, as per a report. Stating that lenders and borrowers will face volatile times with the Reserve Bank raising the repo rate by 40 bps to 4.40 per cent and the cash reserve ratio (CRR) by 50 bps on May 4 in an off-cycle policy move, India Ratings said the market rates had already been moving higher before the move. The 364-day T-bills have moved up 120 bps and 10-year G-sec by 140 bps since May 2020, when the repo rate was cut to a record 4 per cent, which led to an expectation of a faster and sharper rise in interest rates in the system but the central bank stayed the course to support the fragile economy battered by the pandemic.
The Reserve Bank of India will provide foreign exchange liquidity to foreign branches and subsidiaries of Indian banks through currency swaps.
Market breadth turned negative with 1,779 declines over 884 advances on the BSE
Banks led the decline with Nifty Bank and BSE Bank index dropping over 3% each.
That's the only way to convince those who have money to return to the bank fold, ditching other asset classes, says Tamal Bandyopadhyay.
The Reserve Bank of India kept interest rates on hold at 7.50 per cent.
A reading below 50 means contraction in the sector.
RBI Governor has been under pressure from Finance Ministry.
An initial reading of the guidelines indicates two factors - potential rise in borrowing cost and lower returns on investment book - could hit the spread of NBFCs.
The main reason was that CPI inflation would likely remain below 4 per cent till July.
Economy improving but long way to full recovery, says FSDC.
An NBFC must actively manage its collateral positions, differentiating between encumbered and unencumbered assets, and monitor such assets so that they can be mobilised in a timely manner, central bank says in circular.
At the heart of Paytm's slide lies the abject failure of its Super App strategy, notes Indrajit Gupta.
The problem for the NBFC sector is the funding inertia by banks and not lack of funds.
Calling out the high real interest rates -- the differential between the policy rate and headline inflation -- as an impediment to investment, the SBI report said the RBI can cut rates by 0.35-0.50 per cent at its next policy announcement.
'To the believers of crypto regulations, I have only one question to ask, how will you regulate it?'
RBI's status quo on rates disappoints economists.
As liquid tightening measures were likely to be temporary, any change in lending rates would depend on the length of these measures, according to bankers.
SBI Research has projected the Indian economy to grow at 7.5 per cent in 2022-23, an upward revision of 20 basis points from its earlier estimate. As per official data, the economy grew by 8.7 per cent in FY22, net adding Rs 11.8 lakh crore in the year to Rs 147 lakh crore, the report said, adding this was however only 1.5 per cent higher than the pre-pandemic year of FY20. "Given the high inflation and the subsequent upcoming rate hikes, we believe that real GDP will incrementally increase by Rs 11.1 lakh crore in FY23. "This still translates into a real GDP growth of 7.5 per cent for FY23, up by 20 basis points over our previous forecast," SBI chief economist Soumyakanti Ghosh said in a note on Thursday.
India's banks rely on overnight borrowings to fund longer-term lending.
Banks and exporters preferred to reduce their dollar position in view of its weakness.
'When an institution believes its knowledge and capability is superior to everyone, it behaves like a frog in the well.' 'And this is precisely the cause for the mess,' says J N Gupta.
Record liquidity infusion by the central bank in the banking system during the financial year 2020-21 amid sluggish economic activity resulted in banks investing more in safe government papers than in extending loans, data from Reserve Bank of India (RBI) showed. This trend has not been seen in nearly two decades, barring 2016 - the year of demonetisation.
Focus to be on unbanked areas; initial capital is set at Rs 100 crore; India Post can apply.
The balance sheet of the Reserve Bank plays a critical role in the functioning of the country's economy.
The IL&FS management is also talking to its second-largest shareholder, Orix Corporation of Japan, to infuse more funds into the company - in case any shareholder backs out during the rights issue.
The committee's suggestion that existing commercial banks be allowed to hold payment banks as subsidiaries is also seen as unviable by RBI and the finance ministry.
RBI said inflation in the second half of the current fiscal is projected at 2.7-3.2%. It retained its GDP forecast for the current fiscal at 7.4%
This development can strengthen the case for interest rate cut by the RBI.
With enough liquidity in the system, lending and deposit rates are likely to fall further
Banks want lower provisioning burden on recast debt, interest on cash reserve ratio deposits.
Banks normally park almost 27 per cent of their funds in government securitie.
As we say shalom to 2016, the key drivers for the markets in the year ahead have become more obvious, says Neeraj Gambhir, managing director and head of fixed income, India, Nomura. First, there is a surging dollar. Second, rising commodity prices. Then, we have the effects of demonetisation.
Morgan Stanley expects RBI to cut rates sharply rather than "dribble down".
The implementation of MCLR from April 1 has already led to a rate cut of 10 basis points on home loans by the country's largest bank, State Bank of India, and others.
The ministry seeks to make lending requirements flexible for banks financing key stalled projects.
India's manufacturing PMI rose to 54.5 in December, 2014, while in the corresponding period a year ago it stood at 50.7, just above the crucial 50 mark which separates growth from contraction.
Nifty saw the biggest weekly gain since the first week of September and comfortably maintained its crucial 8250 levels in today's session
Assocham expressed concern over the precarious situation that the manufacturing sector is in, observing that if the trend does not reverse with monetary and fiscal measures it would be difficult for the industry to generate jobs.
