Bankers have been criticised for not passing the benefits of rate cuts
The Reserve Bank of India (RBI) conducted two overnight variable rate reverse repo (VRRR) auctions on Tuesday, marking the first instance of such action in a single day. The move aimed to reduce liquidity from the banking system, which has been largely in deficit mode for the past four months. Market participants noted that the central bank held the second VRRR auction due to its awareness of funds being released to banks during the day.
Wholesale inflation fell to a 3-month low of 2.04 per cent in July on decline in prices of food items especially vegetables, government data released on Wednesday showed. The decline in wholesale price index (WPI) based inflation in July came after it rose for four months in a row till June, when it was 3.36 per cent. It was (-) 1.23 per cent in July last year. In April wholesale inflation stood at 1.19 per cent.
Reserve Bank of India chief Bimal Jalan said on Friday he was not considering a cut in the short-term repo rate, but added he was in favour of a soft monetary policy bias.\n\n\n\n
Since January this year, RBI has cut the repo rate - at which it lends to commercial banks -- to a gross of 1.25 per cent.
CII suggested the policy measures required to ease the tight liquidity situation by cutting CRR by at least 50 basis points.
Rajan sees banks passing on the benefit of lower rates regime to customers.
Rajan said the central bank has used up all its "space available" to cut interest rates
The Reserve Bank has raised short-term borrowing rate (reverse repo) by 0.50 percentage points and lending rate (repo) by 0.25 percentage points.
Fundraising through qualified institutional placement (QIP) has revived this year, led by commercial banks, after a lacklustre 2022. According to data compiled by Prime Database, Indian companies have raised Rs 53,070 crore in 2023 so far, of which seven banks - Union Bank of India, Indian Bank, Bank of India, Federal Bank, IDFC First Bank, Bank of Maharashtra, and J&K Bank - account for Rs 21,290 crore, or about 40 per cent. If other financial institutions are included, the figure surges to Rs 26,690 crore.
An NCD's credit rating will tell you whether risk possibility is high or low. Instruments rated below AA are regarded as high-risk.
IT and interest rate-sensitive bank, realty, and auto stocks ended with sharp gains.
A day after the RBI raised the benchmark lending rate by 35 basis points, Kotak Mahindra Bank Managing Director Uday Kotak on Thursday said the central bank may go for one more rate hike to bring inflation below its upper tolerance level of 6 per cent. Yesterday, the RBI indicated that it wants inflation to be within the band first and then move towards the target of 4 per cent, Kotak said at the CII Global Economic Policy Summit 2022. "My sense is that there could be one more rate hike and that may be the time for thinking about a pivot, but we got to watch very closely the data, and maybe around 6.5 per cent as it looks today, subject to what happens to the world, subject to what happens to oil, subject to what happens to many other things," he said.
'The rising cost of construction, the cost of doing business, high compliance, and inflation/interest rates going up have already reduced returns to single digits.'
SBI last reduced its lending rate in January by cutting it by 0.05 per cent.
With concern on food inflation ebbing with the monsoon progressing well, the Reserve Bank of India (RBI) is warming up to the idea of a change in stance to "neutral" from "withdrawal of accommodation", according to economists. In his speech on Thursday during the annual event of the Federation of Indian Chambers of Commerce and Industry-Indian Banks' Association, RBI Governor Shaktikanta Das said: "The balance between inflation and growth is well-poised."
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.
RBI unsure whether to cut rates or not in its next monetary policy.
The wider NSE Nifty too ended 21.55 points, or 0.21 per cent down at 10,476.70.
With this lending rate reduction, the bank has lowered 40 bps so far this fiscal year in five successive rate cuts beginning April.
With Deputy Governor Viral Acharya and another member Chetan Ghate voting for a status quo, RBI governor Shaktikanta Das and three others outvoted them for reduction in repo rate to 6.25 per cent from the existing 6.50 per cent.
The growth was primarily driven by domestic investments, which accounted for 60 per cent of the total inflows during the first quarter of the financial year.
State-run Central Bank of India on Thursday said Reserve Bank of India's credit policy initiative has increased pressure on interest rates.
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Bank has cited trend of global easing and weak growth
A day after the Reserve Bank kept key interest rates unchanged, the International Monetary Fund on Wednesday said further interest rate increases are needed in India with monetary conditions still accommodative and credit expanding strongly.
Soon after RBI's decision, three banks namely Yes Bank, HDFC Bank and Union Bank reduced the benchmark prime lending rate by 50 basis point each. SBI had last month slashed benchmark prime lending rate by 75 basis points to 13 per cent.
Most say a rate cut could come in RBI's June policy.
Bankers see upward pressure on interest rates after the Reserve Bank raised two key short-term rates in the busy season credit policy of October.
As FY20 Budget fiscal measures need to be better understood, a reversal of the stance back to neutral will allow MPC flexibility to respond to incoming data.
The nation's largest lender State Bank of India today said it will not hike its lending rates immediately but will wait for further signals from the Reserve Bank's forthcoming annual monetary policy.
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The Reserve Bank may go for a final 25 basis points increase in the current rate hike cycle next week and a reduction would come in only by the end of third quarter of FY24, economists at Axis Bank said on Wednesday. As per media reports, RBI officials met economists on Tuesday, and the latter have suggested the central bank to go for a 25 basis points hike in key rates. Since May 2022, the RBI has hiked rates by 250 basis points, hurting borrowers and some are already concerned about loan tenors extending beyond their working lives as a result of the hikes.
After two rate hikes in less than six weeks aimed at curbing inflation, RBI Governor Raghuam Rajan on Wednesday said the central bank may be done with interest rate increases as their impact on the economy is assessed.
The repo rate could be reduced by 50 bps in the current year.
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.
Axis Bank was the top gainer in the Sensex pack, surging over 13 per cent, followed by ICICI Bank, IndusInd Bank, Maruti, TCS, Kotak Bank and Reliance Industries. On the other hand, Nestle India, HUL, Tech Mahindra and Sun Pharma ended in the red. NSE Nifty zoomed 273.95 points, or 3.03 per cent, to finish at 9,266.75.
The RBI is fully aware that the high-cost loans and high indebtedness of the borrowers could pose financial stability risks, if not addressed by these NBFCs. Governor Shaktikanta Das has issued a stern warning, saying the RBI is closely monitoring these areas and will not hesitate to take appropriate action, if necessary, if the culprits don't opt for self-correction. Watch out for some action, soon, notes Tamal Bandyopadhyay.
RBI retained the GDP growth for the financial year 2018-19 at 7.4 per cent.
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