'If the RBI board forces the management's hand on all the key issues, it should be prepared for resignations by the governor and the key deputy governor, Viral Acharya,' warns T N Ninan.
There was no word on whether or when Patel would be talking to the media about his priorities and plan of action as head of Mint Street
The RBI is not statutorily independent from the government but has long enjoyed wide latitude
Two months before the microfinance sector crisis in October, an internal committee of the Reserve Bank of India (RBI) had warned of possible problems in the sector.
Mortgage lender HDFC Ltd on Friday hiked its lending rate by 50 basis points hours after the Reserve Bank raised the benchmark interest rate to tame inflation. The move would increase EMIs for housing loans by the firm. "HDFC increases its Retail Prime Lending Rate (RPLR) on Housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 50 basis points, with effect from October 1, 2022," the country's biggest housing finance company said in a statement.
A committee headed by Patel recommended retail inflation targeting and a monetary policy committee.
The year 2022 saw the Reserve Bank of India (RBI) start acting on the policy repo rate after a gap of two years. The six-member monetary policy committee of the RBI reduced interest rate sharply - by 115 bps - when Covid-19 struck in 2020. In March 2020, days after the nationwide lockdown was announced, MPC in an unscheduled meeting reduced the repo rate by 75 bps, followed by another 40 bps in May. Status quo was maintained for the next two years since the May repo rate hike.
At least a 25 basis points hike can be expected on the October 5 policy
In the past few years, banks have been reducing the spread of retail loans for new customers while keeping the base rate unchanged.
MFI tactics have even prompted Andhra Pradesh Cabinet to approve an ordinance to rein them in.
The target was for banks to sell Rs 2 trillion worth of non-performing assets to NARCL, the so-called 'bad bank, by 2021-2022. Only 10 per cent of this has been executed.
However, it may still not change its stance on the policy rate as inflationary pressures are coming from high commodity prices.
They alleged that the central bank has "failed miserably" in handling the situation post-demonetisation.
The fifth meeting of Monetary Policy Committee maintained the repo rate, at which it lends to the banks, at 6.25 per cent and the reverse repo, at which it borrows, will be 6 per cent.
The Reserve Bank of India unexpectedly raised its policy interest rate on Tuesday by 25 basis points (bps) but said that if consumer price inflation eases as projected, it does not foresee further near-term tightening.
Raghuram Rajan has appointed him as head of several committees soon after taking charge.
The Reserve Bank remains laser-focused to bring back retail inflation to 4 per cent over a period of time in a non-disruptive manner, Governor Shaktikanta Das stressed while voting for status quo in interest rates, as per minutes of the October policy meeting released on Friday. The central bank has been mandated by the government to ensure the Consumer Price Index (CPI) based inflation is at 4 per cent, with a band of 2 per cent on either side. The retail inflation, which was above 6 per cent during May and June, has started moving down and stood at 4.35 per cent in September.
The Reserve Bank's rate-setting panel will start its 3-day deliberations on Wednesday amid expectations of yet another rate hike of 50 basis points to check high inflation, in line with similar actions taken by other major central banks, including the US Fed. Based on the recommendations of the Monetary Policy Committee (MPC), the RBI had effected 50 basis points increase in repo rate each in June and August after raising the short-term lending rate by 40 basis points in an off-cycle decision in May. The MPC, headed by RBI Governor Shaktikanta Das, is scheduled to meet during September 28-30.
Question remains, what happens when the overseeing committees' members themselves are questioned by investigative agencies?
Duvvuri Subbarao recounts how his tensions with P Chidambaram and Pranab Mukherjee, then finance ministers, over monetary policy spilled over into other issues in the central bank in this excerpt from Who Moved My Interest Rate?, his memoir of his term as Reserve Bank of India governor.
Growth remains weak, inflation is within 2-6% range, rate cut would help recoup forex reserves
The Reserve Bank of India-constituted committee on procedures and performance audit on public services (CPPAPS) has recommended early introduction of coins of Rs 10 denomination.
RBi pushes for reinvigorating private investments, clearing infra bottlenecks and providing big thrust to Pradhan Mantri Awas Yojana.
There is a near consensus that at least a 25 basis points cut, if not 50, can be expected in the June policy.
Coal India topped the losers' list in the Sensex pack on Tuesday, falling 2.36 per cent, followed by Bharti Airtel at 2.16 per cent.
If this turns into reality, India's gross domestic product (GDP) growth will be the lowest since 2012-13, which could severely hit job creation and income growth in the near term.
Last week, a Sebi-RBI committee had recommended introduction of currency futures markets, initially for dollar-rupee contract, to enable investors manage volatility in the currency market. The committee had suggested that the minimum size of the currency futures contract at the introduction would be $1,000.
Governments that do not respect central banks' independence will sooner or later incur the wrath of the financial markets, ignite economic fires, and come to rue the day they undermined an important regulatory institution; their wiser counterparts who invest in central bank independence will enjoy lower costs of borrowing, the love of international investors, and longer life spans, said Acharya, who will return to the New York University's Stern Business School in August.
Banks seems to be upset over RBI's move over rate cut.
In a tightening cycle, a premature pause in monetary policy action would be a costly policy error, Reserve Bank Governor Shaktikanta Das opined while voting along with five other members of the MPC for raising the key lending rate by 35 basis points earlier this month, according to the minutes of the meeting released on Wednesday. Prior to the December hike in repo rate, the RBI had raised the key short-term lending rate by 190 bps in four tranche.
Retail inflation fell to a 15-month low of 5.66 per cent in March, mainly due to a decline in food prices, government data showed on Wednesday. The inflation figure in March is within the RBI's comfort zone as it is below 6 per cent. The retail inflation based on Consumer Price Index (CPI) was 6.44 per cent in February 2023 and 6.95 per cent in the year-ago period.
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.
Banks are set to sell dud-loans worth Rs 90,000 crore of 22 firms in the first tranche to the National Asset Reconstruction Company (NARCL). It's reason for cheer given that such sales to asset reconstruction companies (ARCs) have been poor in recent times. In fiscal 2020, their assets under management (AUM) contracted by 4 per cent; and in fiscal 2021, it fell by another 100 basis points to Rs 1.07 trillion. So, why are we where we are?
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.
Here is some background on the candidates seen as potential successors to Rajan at the RBI
As per the proposal, the banking sector deposits which have not been claimed for 10 years or more will be transfered to 'Depositor Education and Awareness Fund Scheme'.
RBI declines to accede to plea, upheld by Padmanabhan panel, for priority sector tag; feels move would dilute claims of those needing it more.
The downward surprise in Q2 stemmed from a stronger-than-anticipated drag from gross fixed capital formation and marginal weakness in private final consumption expenditure. In Q3, projection errors emanated mainly from a steep unanticipated contraction in gross fixed capital formation, which was the deepest in the new series of GDP.
Generally, the central bank grants its approval by mid-March, or latest by March 31, but most banks have not received RBI approval on bonus packages this year.
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