It further pointed out that the twin balance sheet problem -- at the end of banks and corporate -- more attractive interest rates for borrowers in the bond market and from non-banking financial institutions are other reasons for slow bank credit growth.
Observing that there is liquidity overhand of Rs 13 lakh crore in the system, RBI Governor Shaktikanta Das said on Friday that the exceptional measures undertaken during pandemic will be dealt in sync with macroeconomic developments to preserve financial stability. Since the onset of the pandemic, the Reserve Bank has maintained ample surplus liquidity to support a speedy and durable economic recovery, he said while announcing the outcome of the Monetary Policy Committee (MPC) meeting. The level of surplus liquidity in the banking system increased further during September 2021, with absorption under fixed rate reverse repo, variable rate reverse repo (VRRR) of 14 days and fine-tuning operations under the liquidity adjustment facility (LAF) averaging Rs 9 lakh crore per day as against Rs 7 lakh crore during June to August 2021, he said.
Minutes of the MPC meeting show Das felt economy needs more monetary stimulus as inflation outlook remains uncertain.
Tomorrow's review could also turn out be the last policy anchored by Rajan if the proposed Monetary Policy Committee (MPC) is put in place before the next review due on August 9.
The RBI on Friday said the impact of coronavirus outbreak on the economy will depend on the intensity, spread and duration of the deadly virus even as the central bank refrained from projecting any numbers for growth and inflation amid the widespread uncertainty. While announcing the seventh bi-monthly monetary policy statement for 2019-20, RBI Governor Shaktikanta Das said that in view of the impact of coronavirus pandemic, the growth projections for 4.7 per cent for the fourth quarter of 2019-20 and 5 per cent for the full fiscal are "now at risk".
Prices of food items like cereals, pulses, and edible oils rose or remained steady in May, a Reserve Bank of India (RBI) report said, indicating there could be another higher inflation print. However, it observed that the Monetary Policy Committee's (MPC's) surprise move to increase interest rates bodes well for its credibility. The RBI's monthly State of the Economy report, released on Tuesday, citing high frequency food price data from the Ministry of Consumer Affairs for the period May 1-12, said the increase in the prices of cereals was primarily because of the surge in wheat prices.
Relations between the Mint Road and North Block have often been frosty, with the former's calls for lowering rates being the biggest point of difference
The finance ministry has received about 100 applications for the post, which have been sent to the high-level panel that will select a suitable candidate for the post, sources said.
The Reserve Bank of India on Friday decided to leave benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance as the economy faces heat of the second Covid wave.
Will RBI chief have the final say, in the form of a veto
The RBI was not party to the decision to demonetize 500 and 1,000-rupee notes, which was taken at the highest level of India's political leadership.
The criticism that the Reserve Bank of India was behind the curve in hiking interest rate to tame rising inflation is unfair, former RBI Governor D Subbarao said on Wednesday and asserted that it is difficult for any central bank to anticipate the future more accurately. Earlier this month, Monetary Policy Committee (MPC), the central bank's rate-setting panel, surprised the markets with a 40 basis points hike in repo rate in an off-cycle policy meeting. It was also the first rate hike after August 2018, amid spiralling inflation.
The Reserve Bank of India (RBI) on Friday kept the key repo rate unchanged at 4 per cent in view of rising inflation and faint signs of economic growth amid the gradual lifting of coronavirus related countrywide lockdown.
Governor Urjit Patel and his deputies spoke to the media about the central bank's decision to raise the repo rate.
Retail inflation declined to a five-month low of 4.85 per cent in March mainly due to cooling food prices, inching towards the Reserve Bank's target of 4 per cent, according to official data released on Friday. The Consumer Price Index (CPI) based retail inflation was 5.09 per cent in February and 5.66 per cent in March 2023. Previously, CPI-based inflation was the lowest at 4.87 per cent in October 2023.
India is much better placed today to deal with future waves of the pandemic relative to the first wave, RBI deputy governor Michael Patra said.
An immediate RBI rate cut will lower lending rates for banks' MSME/retail/mortgage loans before the 'busy' industrial season ends in March.
The Reserve Bank of India's interest rate decision, domestic macroeconomic data and global trends will dictate terms in the equity markets this week, analysts said. Trading activity of Foreign Portfolio Investors (FPIs) will also influence markets, they added. "The Indian market will be closely monitoring the Reserve Bank of India's Monetary Policy Committee (MPC) meeting scheduled for June 6-8, 2023. Aside from that, market participants will be keeping an eye on the progress of monsoon," said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.
Stock markets will be driven by quarterly earnings by index majors, global trends and the RBI's interest rate decision this week after digesting news on budget proposals and US Federal policy outcome, say analysts. The trading activity of foreign investors and the movement of global oil benchmark Brent crude would also dictate trends in equities. "On the domestic front, the MPC (Monetary Policy Committee) meeting is scheduled from February 6-8.
ICICI Bank, the second-largest private sector lender and state-owned Indian Bank on Monday raised their lending rates across all tenors in anticipation of a rate hike by the RBI later this week. The rates have been increased across all tenors under the marginal cost of funds-based lending rate (MCLR) system, a move that will make EMIs expensive for those who availed loans benchmarked against the MCLR. Under the revised rates, effective August 1, ICICI Bank's one-year MCLR has increased by 15 basis points or 0.15 per cent to 7.90 per cent, while the overnight MCLR rose to 7.65 per cent, as per information posted on the bank's website.
All-out efforts are needed to mitigate the adverse impact of the Covid-19 pandemic, and the RBI will use any instrument necessary to revive growth and preserve financial stability, according to the minutes of the central bank's policy meeting.
Reserve Bank Governor Shaktikanta Das on Friday said the rupee is holding up relatively well when compared to the currencies of emerging market peers and advanced economies. Days after the domestic currency breached the 80-level against the dollar, Das said Reserve Bank of India (RBI) has zero tolerance for volatile and bumpy movement in the rupee and added that the central bank actions have helped in smoother movement. He said RBI has been supplying US dollars to the market to ensure adequate supply of liquidity and also clarified that the central bank does not target a particular level for the currency.
Bajaj Finance was the top gainer in the Sensex pack, rising around 4 per cent, followed by Maruti, SBI, Bajaj Finserv, Sun Pharma and Asian Paints. NSE Nifty rallied 293.05 points to 17,469.75.
A three-year validity of an inflation target is, perhaps, more reasonable and practicable.
Fintech companies believe that the impact of Reserve Bank of India's order last week on unsecured loans will be visible in six to 12 months and prompt them to diversify and strengthen their secured portfolio. Fintechs which source funds through banks or non-banking finance companies (NBFCs) are looking at quickly building their secured portfolio options to at least 40 per cent of their total portfolio. "Over the medium to long term, as part of our product strategy, we are evaluating secured products which can be enabled over a digital platform" said Yogi Sadana, the founder of Zype, a lending-focussed fintech.
A committee headed by Patel recommended retail inflation targeting and a monetary policy committee.
While there are certainly more hawks perched on monetary policy committees of central banks around the world now than a couple of months ago, the doves still have the upper hand.
Fitch Ratings on Tuesday retained India's economic growth forecast at 7 per cent for the current fiscal, but cut projections for the next two financial years saying the country is not impervious to global developments. In its December edition of the Global Economic Outlook, Fitch projected India's GDP to grow at 7 per cent in the current fiscal, at a slower rate of 6.2 per cent in 2023-24 and at 6.9 per cent in 2024-25. In September, Fitch projected 7 per cent growth for the current fiscal, followed by 6.7 per cent in 2023-24 and 7.1 per cent growth in 2024-25.
The MPC states that the 4 external members will have a tenure of four years each.
ICICI Bank was the top gainer in the Sensex pack, rising around 4 per cent, followed by UltraTech Cement, Sun Pharma, Bharti Airtel, HUL, SBI, L&T, Axis Bank and IndusInd Bank. On the other hand, Reliance Industries, Bajaj Finserv, HCL Tech and HDFC were among the laggards.
'Pump prices of petrol and diesel have reached historical highs. An unwinding of taxes on petroleum products by both the Centre and the states could ease the cost-push pressures,' the Monetary Policy Committee (MPC) has said.
India is likely to grow by 7.5 per cent in the first quarter of the current financial year, driven by rising aggregate demand and non-food spending in the rural economy, according to an article in the RBI's May Bulletin released on Tuesday. The Indian economy has demonstrated marked resilience in the face of geopolitical headwinds impacting the supply chain, said an article on the state of the economy published in the May Bulletin.
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.
The Reserve Bank of India on Wednesday retained the economic growth projection for the current financial year at 10.5 per cent, while cautioning that the recent surge in COVID-19 infections has created uncertainty over the economic growth recovery. In its last policy review, the RBI had projected a GDP growth rate of 10.5 pc for FY'22. Taking various factors into consideration, it said, "the projection of real GDP growth for 2021-22 is retained at 10.5 per cent consisting of 26.2 per cent in Q1, 8.3 per cent in Q2, 5.4 per cent in Q3 and 6.2 per cent in Q4."
RBI recently cut repo by 0.25 percentage point, taking the rate to 7.25 per cent in three reductions since January.
The Reserve Bank may be hitting the end of its tolerance for high inflation and will most likely hike interest rates in the first half of 2022, analysts said on Friday. The central bank will also start rolling back its accommodative policies which have led to easy liquidity conditions, they said. The view from analysts came even as inflation cooled down to 5.6 per cent for July, after two months of breaching the upper end of the RBI's tolerance band of 6 per cent.
The repo rate has been left unchanged at 4 per cent, Governor Shaktikanta Das said while announcing the decisions taken by the central bank's MPC.
Tata Steel was the top gainer in the Sensex pack, climbing 2.11 per cent, followed by Infosys, HDFC Bank, HDFC, Kotak Bank, M&M and PowerGrid. NSE Nifty jumped 142.05 points to end at 17,605.85.
The Reserve Bank of India (RBI) will maintain the policy repo rate at 6.5 per cent during its upcoming June 8 announcement, considering the easing of retail inflation in April and the potential for further decline, indicating the effectiveness of previous policy rate actions, anticipate experts. Headed by Reserve Bank Governor Shaktikanta Das, a meeting of the six-member Monetary Policy Committee (MPC) is scheduled for June 6-8. The decision of the 43rd meeting of the MPC would be announced on Thursday, June 8.
The Reserve Bank of India, for the second straight time, on Thursday kept its key policy rate unchanged at 5.15 per cent, maintaining its accommodative policy stance as long as it was necessary to revive growth. The central bank retained GDP growth at 5 per cent for 2019-20 and pegged it at 6 per cent for the next fiscal.
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