The move will to a large extent speed up the monetary transmission process--which is banks passing on the rate cuts that the Reserve Bank announces to their borrowers without much delays--something that has been missing all these while and something that the RBI has been unhappy with.
Costlier vegetables slowly pushed retail inflation, which had remained well within the Reserve Bank's comfortable level of 4 per cent during most part of 2019, peaked to more than three-year high of 5.54 per cent in November.
The public sector banks are not in a position to cut rates because of their weak balance sheets and massive portfolios of non-performing assets, says Devangshu Datta.
Banks want lower provisioning burden on recast debt, interest on cash reserve ratio deposits.
SBI is the first major state-run bank to hike lending rates after short-term rates rose as a result of the Reserve Bank of India's liquidity tightening moves announced in July.
Events to keep an eye out for...
India's gold import bill, estimated at $3 billion in May, is seen falling further this month
The dollar-rupee rate could move in the opposite direction if dollar policy rates rise and the FPIs sell in December, says Devangshu Datta.
India's gross domestic product growth rate slipped to 7%.
Inflation in 'fuel and power' basket rose sharply to 11.22 per cent in May from 7.85 per cent in April as prices of domestic fuel increased in line with rising global crude oil rates.
India's first quarter GDP growth print was 7.9 per cent y-o-y, primarily led by urban consumption demand
The benchmark BSE Sensex reclaimed the 28,000 mark, spurting by 409 points or 1.4% at 28,114 and Nifty settled above the 8,500 mark at 8,532, gains of 111 points.
S&P BSE Midcap shed 0.8% while S&P BSE Smallcap tumbled 0.6%
Auto and realty shares were among the top Sensex gainers.
Rajan, as expected, furthered his predecessors' agenda and continued with the same resolution to make India's financial system safer, and direct the economy towards further liberalisation
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.
Broader market outperformed the benchmark indices with S&P BSE Midcap gaining over 1%
NITI Aayog vice chairperson Rajiv Kumar tells Indivjal Dhasmana that additional funds could be generated through divestment, and that the fiscal deficit should be widened while focusing on the revenue deficit.
YES Bank raises base rate; HDFC Bank, Axis hike deposit rates.
This is the first time in the RBI's history that a governor is leaving without willing to renew his contract
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The broader consensus was that the Fed would cut the monthly stimulus of $85 billion by $10-15 billion.
Banks might hold on to lending rates for the time being.
CPI inflation could fall marginally but stay above RBI's comfort level.
Sensex lacklustre, bluechips in focus.
He endorsed transparency and financial stability in addition to issues related to inclusive growth and development, write Puran Singh and Nupur Pavan Bang.
No stock on BSE Sensex ended in red while only 3 stocks in the broader Nifty50 index settled the day negative
Yet, no bank has been taken to task for its actions, says Harsh Roongta.
The 30-share Sensex ended down 414 points at 25,481 and the 50-share Nifty slipped 119 points at 7,603.
Sensex sinks into red at close on growth concerns.
Lack of political consensus on economic reforms a key concern.
'Aggressively stepping up vaccinations will constitute the most enduring stimulus of all in the coming quarters,' observes Sajjid Z Chinoy, Chief India Economist at J P Morgan.
'Retail investors have been selling since the Budget and Foreign Portfolio Investors started selling.' 'Thus far, domestic institutions have picked up the slack, buying enough to keep the major indices from falling off a cliff.' 'However, there has been carnage in smaller stocks and the financial sector has been hit much harder than the major market indices,' points out Devangshu Datta.
RBI is expected to slash rates by 150 basis points till end-December 2016.
Recent rates cuts by most banks may not have a significant impact on margins, say analysts.
'The overall stress on asset quality is indeed coming down.'
FY16 GDP growth was seen at 7.5%, against 8.1-8.5% earlier.
Chief Economic Advisor Arvind Subramanian's interview.
Food and fuel are two perennial areas of concern.
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