At a time when high-frequency indicators are pointing to easing of growth contraction, the RBI’s accommodative policy may benefit companies as India heads into the festive season. While the central bank signalled that inflation is easing, analysts say the measures will fast-track the economic revival.
RBI keeps policy rates unchanged, says the worst is over for the economy
The newly formed monetary policy committee (MPC) unanimously decided to keep policy rates unchanged in the bi-monthly policy meets for October, while the Reserve Bank of India (RBI) governor said the worst was possibly over for the economy and the focus must now “shift from containment to revivalâ€. The six-member MPC, which was formed earlier this week, met for three days to keep policy repo at 4 per cent, and said the real gross domestic product (GDP) growth rate in 2020-21 could decline by 9.5 per cent, with “risks tilted to the downsideâ€. Read more…
RBI expects ‘modest’ recovery in Jan-March
Six months into FY21, the Reserve Bank of India (RBI) released its first estimate of economic growth in 2020-21 as its October monetary policy committee (MPC) meeting ended on Friday. Accounting for the impact of the pandemic, real gross domestic product (GDP) in FY21 will fall 9.5 per cent, the MPC noted in its statement. Read more…
Early Diwali for homebuyers: RBI move to reduce rates, boost realty demand
The Reserve Bank’s move to rationalise risk weightage on home loans and link it only to loan-to-value (LTV) ratios for new sanctions up to March 2022 is expected to make more credit available to borrowers. It will also bring down cost of funds to buyers, and improve demand for homes, said developers and consultants. The RBI also hiked the single-party exposure limit for loans to retail and small business loans from Rs 5 crore to Rs 7.5 crore. Read more…
RBI governor urges bond market to cooperate, announces outright OMO support
Reserve Bank of India (RBI) Governor Shaktikanta Das had a message straight from the heart for the bond market: RBI is ready to use all available instruments to provide adequate support to the bond market, but market participants must cooperate, and while views can be competitive, they need not be combative. Bond market participants gave a hat tip to the governor by bringing down yields. And now, the government can pretty well expect the remainder of the borrowing to be done in a non-disruptive manner and possibly at the same 16-year low average rate of 5.82 per cent, or even lower for the rest of the financial year, notwithstanding some extra borrowings, or by exercising greenshoe options. Read more…
Now, RTGS payment system to be available around the clock, says RBI
he RBI has decided to made real-time gross settlement (RTGS) system available round the clock on all days from December. This comes after the RBI made national electronic funds transfer (NEFT) system round the clock in December last. Read more…
RBI to conduct on-tap TLTRO worth Rs 1 trillion to nudge credit growth
The Reserve Bank of India (RBI) will provide banks on-tap funds up to Rs 1 trillion to give loans to sectors having multiplier effects on growth. The sectors, which could benefit from this move, include construction, real estate, and micro finance. RBI will provide these funds under on-tap targeted long-term repo operations (TLTRO) at floating rate linked to the policy rate for up to three years. At present, the repo rate is 4 per cent. Read more…
Sonal Varma | How to ease without cutting rates
The Reserve Bank of India (RBI) and its monetary policy committee (MPC) delivered a dovish policy package despite keeping policy rates unchanged. With inflation above 6 per cent for many months and high-frequency indicators suggesting that the economy has embarked on a recovery path, the macroeconomic backdrop going into the October policy meeting would have suggested prioritisation of inflation over growth. However, this is far from the truth and the MPC has rightfully set the record straight by stating that it views current inflation as transient, whereas growth revival needs policy focus. Read more…
Tamal Bandyopadhyay | Three cheers for RBI’s October policy
Bond prices rallied, bank stocks rose and rupee appreciated on Friday, cheering the Reserve Bank of India’s (RBI’s) October monetary policy. The Monetary Policy Committee (MPC), Indian central bank’s rate-setting body, with three new members on board, met between October 7 and 9, with one eye on the markets and the other on the economy. Read more…
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