rbi policy

RBI policy meeting highlights RBI governor Shaktikanta Das takes 'hawkish break'; remains conservative in effect 

 

 Highlights of RBI MPC 2023 meeting 

 Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday announced the 24th fiscal policy for the third fortnight of the year. The three-day meeting of RBI's six-member Monetary Policy Committee (MPC) was held on 8-10. August. RBI has kept the repo rate at 6.5 for the time being. The central bank increased the repo rate by 250 basis points (bps) from May 2022. 

 RBI Policy Notes View the most important RBI policies 

 Then there are important excerpts from the RBI policy 

Interest Rates-

•  - The repo interest rate did not change at 6.5 
•  - The fixed deposit facility rate (SDF) remains at 6.25 
•  -Fixed Fixed Exchange Rate (MSF) and bank exchange rate 6.75 
•  - CRR 4.5 

GDP exceeds -

 In the 224th fiscal year, the strength of real GDP growth remained at the level of 6.5 

•  - 8 on the GDP of the 24th quarter 
•  - GDP value in the II quarter of 2424 6.5 
•  - GDP value in the 3rd quarter of 2024 6 
•  - GDP for the 4th quarter of the 24th financial year 5.7 
•  - GDP growth in the first quarter of 2025 is expected to be 6.6 

 

 Prediction of impact -

•  - The 24-year CPI effect was increased from 5.1 to 5.4 
•  - The CPI headline value for Q2FY24 increased from 5.2 to 6.2 
•  - The impact value of CPI in the third quarter of 2024 increased from 5.4 to 5.7 
•  - CPI impact for Q4FY24 maintained at 5.2 
•  - The impact of the CPI in April-June 2024 refers to 5.2 

 

 Liquidity measures 

 All listed banks will have to maintain a 10 percent incremental credit ratio (I-CRR) based on growth in net demand and arrears (NDTL) from May 19, 2023 to July 28, 2023. change in the framework of the IDF 

The non-controlling framework for debt financing (IDF) has been revised. 

The crucial changes in the revised framework are i) abolition of IDF guarantee requirement, ii) ability of IDFs to finance risk-to-operation transfer (ToT) schemes as direct lenders, iii) ability of IDFs to raise funds through IDF. ECB and (iv) make tripartite arrangements optional for PPP systems. Of variable interest loans 

 Propose to implement a transparent framework to reset interest rates on variable rate loans. 

 UPI -

• - Launch of chat payments on UPI 
• - UPI Lite sale limit increased from ₹500 to ₹200 
• - Enables offline payments using Near Field Communication (NFC) technology. 

Live Policy Response from RBI Policy Meeting - Suresh Khatanhar, MD & CEO, IDBI Bank 

 RBI's decision to keep the repo rate unchanged at6.50 is in line with the inflationary trends seen so far and unborn prospects. While global economic growth is expected to moderate this fiscal, it is encouraging that the overall profit performance in the Indian environment has been encouraging. The RBI's commitment to a strong focus on target 4 is a sign of a benign rate script moving forward. The decision to increase the CRR only aims to absorb the fat liquidity created by color factors and is a temporary measure to control liquidity is redundant and unlikely to affect the liquidity of the system. Overall, by keeping interest rates unchanged for the third time in a row, RBI has shown that austerity is paying off and will continue to grow. 

 Live policy response from RBI policy meeting - Achala Jethmalani, Economist, RBL Bank 

 The MPC's decision is seen as a "mowing break". The RBI will provide liquidity in line with the current fiscal position to improve the pass-through of previous hikes. The upward shift in sentiment while watching the odd price harpoon continue reinforces the "longer advanced" theme also covered in the encyclopedia. 

 As India's CPI impact begins to weaken in FY24, we expect the repo rate to remain unchanged at 6.50. Any price shock can change the outlook. 

 RBI Policy Meeting Live Sensex, Nifty extend losses hawkish RBI; so say the experts 

Domestic stock immolations, the Sensex and the Nifty extended their losses, while interest-sensitive sectors similar as banking, motors and horticulture originally turned green but latterly fell after the Reserve Bank of India's( RBI) financial policy commission( MPC) met.) kept interest rates unchanged and the status quo on Thursday, August 10, as expected. 

 Live policy response from RBI policy meeting - Abheek Barua, Chief Economist and Vice President, HDFC Bank 

 The RBI kept its policy rate at 6.5 as expected, but its communications were easily mixed. This was reflected in the increase of 100 basis points to 6.2 and the decision to tighten liquidity with the additional capital adequacy ratio of banks. The latter can reduce the liquidity balance of the scheme by ₹ 60,000-70,000. While the ICRR decision will be reviewed in September and may be an interim decision, liquidity is likely to be permanently tightened as leverage continues. 

The RBI reiterated its decision to restore the impact to 4 on a sustainable basis and highlighted the difficulties in addition to the temporary pressure on vegetables. We expect the impact to be normal at 5.6 in FY24 and the impact is expected to be felt on September 6. 10 Aug 2023, 010055 PM IST 

 Madhavi Arora RBI Policy Brief: Direct Impact of CRR Increase 

 Madhavi Arora, Chief Economist, Emkay Global Financial Services explains the impact of the increase in CRR

- Rising CRR (ICRR) at 10 NDTL (period 19 May-28 July) indicates a temporary decrease in liquidity 115 tn / ₹ 996 billion (binary merger partner of HDFC). Here we assume that the actual solvency ratio for this period is 14.5 (4.5 10). 

However, if we assume an ICRR of 10, which includes a CRR of 4.5, the liquidity would be reduced by ₹ 650 billion / ₹ 548 billion for HDFC's binary merger partner. We are waiting for clarity on RBI's ICRR estimate in the press conference. But we believe it should be the first (ie 14.5 effective CRR) 

-Overall, this would also lead to interest losses for banks, as banks tied up short-term liquidity with STPLs (short-term special loans) and plutocratic requests to rather park at VRRR with RBI, which also helped CP / CD rates somewhat. The immediate effect of RBI absorbing liquidity through ICRR is some tightening of interest rates charged by plutocrats to borrowers, including NBFCs, while banks also have a marginal effect on their NIMs (3-4 basis points) depending on the instruments they borrow from. a loan plutocrat (assuming 14.5 effective CRR). 

-However, some banks (especially public broadcasters) benefited more than others from the liquidity caused by the withdrawal of Rs2K notes, while others struggled to get deposits due to the rise in interest rates. 

-However, all banks are required to maintain ICRR, which may prove illegal for some banks that have not benefited significantly from the withdrawal of ₹2,000 notes (mostly PVBs). 

-As expected, RBI has advised bank NBFCs due to aggressive lending (flying loans) and they must maintain reasonable provisioning buffers. According to our banking group, this forces the regulated reality to maintain the improved PCR or at least prevent them from changing (which affects RoA to some extent). 

-Especially ICICI, HDFC Bank, Axis Bank among banks have maintained a strong conditional buffer between banks (0.7-1.2) so they should not have any impact. 

Live policy response from RBI policy meeting - Prasenjit Basu, Chief Economist, ICICI Securities While monitoring the effects of the thunderstorm and El Niño is warranted, we expect rates to remain unchanged in CY23, with future policy likely to be a rate cut in April 2024.Mortgage rates have tightened in recent months, but are likely to remain unchanged until the end of CY23 as the policy rate remains stable.

 Live Policy Response from RBI Policy Meeting - Satish Menon, Managing Director, Geojit Financial Services 

The number of effects has increased and it is possible to weaken the threat in the near future. The general twist is that a large impact is expected to last for a long time, indicating that interest rates will remain high for a long time. In general, high interest rates affect the growth and evaluation of business results. However, India's impact is likely to be offset by strong domestic demand and growing global orders, led by China and one strategy. 

 RBI Policy Meeting Live Policy Answer - Indranil Pan, Chief Economist at Jah Bank 

 There were almost no surprises and, unlike the application views, there was no sharp trend in the comments. However, as any good central bank would do, the RBI indicates that it will continue to look ahead and consider its expected impact on unborn fiscal policy views. Practically, the RBI is looking at the likely harpoons in imminent retail sales due to the sharp rise in vegetable prices. Similar seasonality is expected to fade with the arrival of the new crop – reflecting the impact of the RBI. 

 While the RBI sharply increased the number of impressions in the second quarter, the number of impressions in the fourth quarter remained the same. Monitoring the impact would continue to take into account all the moving parts and the RBI remains open to putting in any instruments that may be necessary to align the impact with the four objectives. If interest rates remain unchanged, the RBI said excess liquidity could create difficulties in price stability. 

 RBI Policy Meeting Live Incremental CRR was not the only tool available to the RBI Governor 

 RBI Governor Shaktikanta Das said that increasing the CRR was an elegant option in the current situation, but it was not the only tool at our disposal to deal with the liquidity. RBI Policy Meeting Live Private Investment Flows in Key Sectors RBI Governor 

 Private investment is advancing in some key sectors such as iron and steel, automobiles, petroleum, chemicals and essentials, etc. It should be ahead in other sectors as well as conditions in the country are favourable, says RBI Governor Shaktikanta Das. 

 RBI Policy Meeting Direct RBI Agile Liquidity Behavior Governor Shaktikanta Das 

 Liquidity is a dynamic number and we cannot define if there is a comfortable position. We do fine tuning operations, repo and reverse repo on both sides. We are dealing with the situation continuously," RBI governor Shaktikanta Das said.