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.
The services sector growth in India fell to a one-year low in November on softer expansions in new work intakes and output, despite receding price pressures, a monthly survey said on Tuesday. The seasonally adjusted S&P Global India Services Business Activity Index fell from 58.4 in October to a one-year low of 56.9 in November. Despite witnessing a month-on-month decline, the rate of expansion was stronger than its long-run average.
The central bank says that there is room for policy action, but warns of persistent inflation risks.
While India has in no way contributed to global financial imbalances, it has a huge stake in the process of unwinding of these imbalances and its impact on exchange rates, former Reserve Bank of India governor Y V Reddy has said. He was speaking at the Indian Council for Research on International Economic Relations.
A top-class board is important from a systemic point of view, more so at a time when the wider financial world and India Inc is chasing the same talent as banks.
Reserve Bank of India Deputy Governor K C Chakrabarty has called for changes in the rating and reporting standards of banks, saying a bank should not be rated just on the basis of its net interest margin and net profit, but from a non-financial angle too.
Reserve Bank of India Governor D Subbarao on Friday increased mandatory cash reserve of banks held by RI by 75 basis points (0.75 per cent) in a bid to suck excess liquidity to combat rising inflation.
Even as the deficits on fiscal and current account fronts have been building up, it is highly unlikely that the country could witness the repeat of the 1991 economic crisis that was caused by similar factors, said Duvvuri Subbarao, Governor of the Reserve Bank of India (RBI) on Thursday.
Many banks' profits will take a hit and a few of them could even end up being in the red because of treasury losses, triggered by a sudden spike in government bond yields in the rising interest rate cycle, notes Tamal Bandyopadhyay.
Reserve Bank of India Governor YV Reddy has said that Indian financial market is not vulnerable to overseas development. The Indian financial sector is likely to be less affected by the contagion than most other emerging market economy (EMEs), in respect of first-round or direct effects. The Indian equity markets have been volatile in recent months and that has some impact on changing sentiments. He said India has not been contributing in the global macro economic imbalances.
The criticism of the RBI governor's handling of inflation is fraught with an oversimplification of the current inflation dynamics.
The majority view remains for the central bank to leave the cash reserve ratio unchanged at 4 per cent.
The appointment of a deputy governor to the country's central bank has always been surrounded by controversy. And this time is no exception. One of the Reserve Bank of India executive directors, C Krishnan, who was called to an interview for the post, has declined to appear before the search committee. The interview was scheduled for September 9.
All the bank notes in the denomination of Rs 20 issued by the RBI in the earlier series will continue to be legal tender, it clarified.
His comments poured cold water on hopes that the central bank may have a rethink on rates after the wholesale price index, the main inflation gauge, rose a lower-than-expected annual 7.25 per cent in June, its slowest rise since January, helped by moderation in fuel prices.
The government is "extremely disappointed" with the latest report of the Moody's rating agency on India's economic outlook. The report, a senior government official said, was highly contradictory and called the rating agency's credibility into question. Referring to the Moody's statement that "India's fiscal strength remains a key weakness in the sovereign credit profile...", the official remarked: "How can my strength be my weakness? Moreover, they are unwilling to have a like-to-like comparison with India."
Market participants attribute the stability to the Reserve Bank of India's timely intervention in the foreign exchange market, both in terms of selling and buying dollars.
The RBI raked in a massive net income gain from foreign exchange currency sales as a buffer for the rupee during tumultuous geopolitical upheavals last year owing to Russia's invasion of Ukraine.
The RBI targets inflation at 6 percent by January 2016 and 4 percent for 2017/18.
Market participants do not expect any immediate impact on the rupee from the Reserve Bank of India's (RBI's) a "comprehensive" master direction aimed at strengthening the framework for hedging foreign exchange risks. RBI Governor Shaktikanta Das, in his monetary policy statement, revealed that the central bank is poised to issue a master direction to consolidate guidelines for all types of forex transactions. But this development, according to market players, is more of a directional guidance than a mandatory directive.
Raghuram Rajan, whose current three-year tenure ends on September 4, has already said no to a second term.
RBI Governor Shaktikanta Das kept the red flag on cryptocurrencies flying, warning that the next financial crisis can be triggered by private cryptocurrencies if such speculative instruments are allowed to grow.
RBI Governor Shaktikanta Das on Friday said the entry of big tech firms into the financial sector poses systemic concerns like overleveraging at the borrowers' ends.
He will take the place of Subir Gokarn, who was in-charge of the monetary policy department, has retired.
'So, we would work with our members to ensure that we as an SRO create some sort of due diligence for fintechs.'
The regulatory actions, undertaken by the RBI and the government, came hours after finance ministry sources confirmed that SBI was directed to bail out the troubled lender. For the next month, Yes Bank will led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of SBI.
While the fiscal year has just begun, any windfall surplus will be welcomed by the government as it bids to meet the fiscal deficit target of 5.9 per cent of GDP, amidst lack of clarity on exactly to what extent will recession in the West impact India's trade and tax collections.
The government in its budget for the current fiscal decided to borrow Rs 4.5 lakh crore (Rs 4.5 trillion) from the market, up from Rs 3.1 lakh crore (Rs 3.1 trillion) in the previous fiscal.
Subramanian, a senior fellow at the Peterson Institute for International Economics in Washington, attended a news conference in New Delhi at which his appointment was announced.
Most members of the Reserve Bank of India's monetary policy committee (MPC) decided to stick to the course on bringing retail inflation to the target of 4 per cent while voting for maintaining status quo in the April review, except external member Jayanth Varma who voted for a 25 bps cut in the repo rate. "I believe that the extant monetary policy setting is well positioned," RBI governor Shaktikanta Das said in the minutes of the policy review, which came out on Friday. "Monetary policy transmission is continuing and inflation expectations of households are also getting further anchored.
In his first interaction with the media after taking charge, former PNB chairman and managing director K C Chakrabarty said, "When the government is giving a certain interest rate on small savings, it is not logically correct for banks to provide a lower rate of interest. When we are saying that interest rates are coming down, that means the small savings rate should also come down."
The Reserve Bank is likely to maintain status-quo on the key interest rates for the third time in a row in its upcoming bi-monthly policy review despite the US Federal Reserve and the European Central Bank hiking benchmark rates, as domestic inflation is within the RBI's comfort zone, say experts. The borrowing cost which started rising in May last year has stabilised with RBI keeping the repo rate unchanged at 6.5 per cent since February when it was raised from 6.25 per cent. In the previous two bi-monthly policy reviews in April and June the benchmark rate was retained.
The Reserve Bank of India on Friday slashed the growth projection to 7 per cent for the current fiscal from the earlier forecast of 7.2 per cent, citing aggressive tightening of monetary policies globally and moderation in demand. Unveiling the fifth monetary policy for this fiscal, RBI Governor Shaktikanta Das said the central bank remains committed to price stability to put the country on the sustained path of growth.
Investors will see that India story actually continues to be a good one, he said.
It is only after the government's nod that a particular design change come into effect.
'...because it is still a legal tender.'
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.
Rajan was expected to join the search committee to appoint three external members of a new six-member RBI Monetary Policy Committee
Remarks come at a time when he is under pressure from the govt to cut interest rates.
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