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The Reserve Bank is unlikely to ease the benchmark policy rate from 6.5% during 2024, given the persisting uncertainty over <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">food inflation</keyword>, State Bank of India (<keyword id="19898108" type="General" weightage="20" keywordseo="SBI" source="keywords">SBI</keyword>) chairman C S Setty has recently said. The US Federal Reserve's first cut in <keyword id="20071327" type="General" weightage="20" keywordseo="interest-rate" source="keywords">interest rate</keyword>s in more than four years happened today, triggering central banks in other economies to follow suit. The Fed trimmed the interest rates by 50 basis point trim to its target interest rate range to 4.75-5%. "On the rate front, a lot of central banks are taking independent calls. While Fed rate cut would influence everyone, <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> would be mindful of the food inflation before taking a call on interest rate cut," Setty, who recently took over the reins of the bank, was noted as saying. "Our view is also that the rate cut during the current calendar year may not happen. Probably, we may have to wait for Q4 (January-March 2025) unless there is a good improvement in terms of food inflation," he added. Notably, RBIs <keyword id="19913109" type="General" weightage="100" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (MPC), headed by RBI Governor Shaktikanta Das is scheduled to meet next month, between October 7-9 and take a call on interest rate. The committee will largely take <keyword id="19999652" type="General" weightage="20" keywordseo="retail-inflation" source="keywords">retail inflation</keyword>, which inched to 3.65% in August, up from 3.54% in July, into account for making rate-related decisions On the other hand, India's wholesale price index (WPI) eased to 1.31% on an annual basis, which is also a 4-month low, down from 2.04% in July. The data, released recently by the government, also highlighted the stickiness of food price inflation, which stood largely undeterred at 3.11% in August, as compared to 3.45% in July. Although WPI rates do not directly impact RBIs decision making, it does affect the retail inflation rates, although it takes time to reflect the same. Says Rahul Agrawal, Senior Economist at ICRA Ltd, “The <keyword id="20198768" type="General" weightage="20" keywordseo="WPI-inflation" source="keywords">WPI inflation</keyword> eased to a four-month low in August 2024, with the fuel and power, core (non-food manufacturing), and crude petroleum and natural gas sub-groups together pulling down the headline WPI print by as much as 70 bps in the month vis-à-vis July 2024. The core WPI inflation dipped to 0.7% in August 2024 from 1.2% in July 2024, amidst a continued softening in global commodity prices. "While prices of most food items have eased further on a month-on-month basis in September 2024, an adverse base would push up the YoY inflation prints for the primary food articles category significantly in the ongoing month, exerting upward pressure to the headline WPI inflation print for September 2024", said Agrawal. The price of the Indian basket of crude oil has averaged 6.0% lower in September 2024 on a sequential basis, touching the lowest levels in 33 months, which would also help contain the uptick in the headline WPI inflation print in the month. We anticipate WPI to touch the 2.0% in September 2024 from 1.3% in August 2024", he continued. Amongst the food articles whose prices dipped during the month were cereals (8.44%), paddy (9.12%), pulses (18.57%) and onions (65.75%), it did little to tame inflation, which continued to stay put in double digits. On the other hand, prices of potato (77.96%) and fruits (16.7%) inched up. The dip in WPI was largely led by slowdown in prices of manufactured food products (3.61%), beverages (1.9%), pharmaceuticals (1.97%) and petrol (4.23%). "While there may not be a one-to-one correspondence between the WPI and the CPI data because of the items, size, number, and relative weights assigned, the CPI data will also down-trend in sync with the RBI’s medium-term target of 4 % for the second time in nearly five years. However high food prices will induce the RBI to be wary", notes Manoranjan Sharma, Chief Economist, Infomerics Ratings.

RBI unlikely to cut interest rate in 2024, food inflation to be deciding factor, says SBI chief Setty

<keyword id="6354731" type="DOMAIN" weightage="20" keywordseo="state-bank-of-india">State Bank of India</keyword> on Friday announced an <keyword id="413700" type="PERSON" weightage="20" keywordseo="interest-concession">interest concession</keyword> of up to 30 basis points on home loans and a 100 per cent waiver on <keyword id="515211" type="PERSON" weightage="20" keywordseo="processing-fees">processing fees</keyword>. The new home loan interest rates are linked to CIBIL score and start from 6.80 per cent for loans up to Rs 30 lakh and 6.95 per cent for loans above Rs 30 lakh, a bank release said. Women borrowers will get a <keyword id="44979" type="PERSON" weightage="20" keywordseo="concession">concession</keyword> of 5 bps, it said. "With an aim to offer attractive concessions to the home buyers, country's largest lender SBI announces further interest concession of up to 30 bps on home loans and 100 per cent waiver on processing fees," the release said. The bank said interest concession of up to 30 bps is also available in eight metro cities for loans up to Rs 5 crore. Customers can also apply from the ease of their home via <keyword id="6961637" type="COMPANY" weightage="20" keywordseo="yono-app">YONO App</keyword> and get additional interest concession of 5 bps, the release said. "We are pleased to improve our concessions to prospective home loan customers up to March 2021," the bank's managing director (retail and digital banking), C S Setty, said. The lender's eligible existing home loan borrowers can also avail a paperless pre-approved top-up home loan through the YONO App, he added. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/tcs-ongc-tata-power-punjab-national-bank-nhpc-and-other-top-stocks-to-watch/articleshow/80164057.cms" data-type="tilCustomLink">TCS’ market share, ONGC’s borrowing, Tata Power gets new territories⁠— these and other top stocks to watch</a> <a href="https://www.businessinsider.in/tech/news/whatsapp-is-forcing-users-to-share-personal-data-with-facebook-and-elon-musk-is-urging-people-to-switch-to-signal-a-smaller-encrypted-messaging-app/articleshow/80156317.cms" data-type="tilCustomLink">WhatsApp is forcing users to share personal data with Facebook, and Elon Musk is urging people to switch to Signal, a smaller encrypted messaging app</a>

SBI offers discounts on home loans, waives of processing fees

New Delhi, Apr 1 () Three-month moratorium on EMI payments offered by banks is unlikely to bring much relief to borrowers hit by COVID-19 lockdowns as they will have to bear the extra cost of interest charged by lenders and a longer repayment period, according to experts. Experts feel that the three-month moratorium on repayment on loans to help people fight the impact of coronavirus seems to be benefiting banks rather than borrowers as they will have to pay accumulated interest through increased number of EMIs. It is an expensive proposition for any borrower to opt for three-month suspension as announced by the RBI under the relief measures to mitigate the hardship of those hit by the outbreak of COVID-19 pandemic. Last Friday, the RBI had announced that all term loans, including retail and crop loans and working capital payments, will be covered by the three-month moratorium. Banks will now have discretion in deciding the limits on working capital, with the RBI saying that no payment miss should be considered a default and reported to credit information companies. It seems like a double whammy for borrowers as on one side income has been hit due to COVID-19 pandemic and on the other hand, there is a threat of increased tenure if they opt for RBI relief measure. SBI managing director C S Setty said it has two components- people who have term loans and the business units that have working capital loans. "In the case of term loans, the RBI has clarified that the instalments, which includes principal as well as interest, where the instalments are falling due between March 1 and May 31, will be deferred for three months. "So, in a term loan where the instalments are deferred and interest is also deferred means it is to be back ended. No point in again loading the term loan interest right away after three months, which customers would find it difficult," he said. So, what SBI is doing is that these three monthly installments that are falling in this period, will be back ended at the end of the repayment period, he said, adding, any deferment of interest over such long period, if it is there, will entail additional costs because it is not interest waiver, it is interest deferment. The accrued interest will be collected by the lender in the form of additional EMIs from those borrowers who opt for three months moratorium. "We have been telling our customers through social media that if you have the ability and cash flow to pay, it makes sense to pay this amount to avoid the cost. But, the important thing is if you want additional cash flow, you avail this facility, and it costs you," he added. In case of working capital, he said, three months interest will not be applied to the account but it will be applied immediately after the three months. In a note to customers, SBI said, "Interest shall continue to accrue on the outstanding portion of the term loan during the moratorium period". Explaining the financial burden with the help of an example, SBI said for a home loan of Rs 30 lakh with a remaining maturity of 15 years, the net additional interest would be approx Rs 2.34 lakh equal to eight EMIs for those borrowers who opt for the moratorium. "For an auto loan of Rs 6 lakh with a remaining maturity of 54 months the additional interest payable would be Rs 19,000 approx equal to additional 1.5 EMIs". Releasing frequently asked questions (FAQ) Indian Banks'' Association (IBA) said that borrowers whose incomes have not been impacted should pay their EMIs in time. "You may take the benefits under this (RBI) package if there is a disruption in your cash flows or there is loss of income. However, you must take into account that the interest on the loans, though not mandatorily payable immediately and gets postponed by 3 months, continues to accrue on your account and results in higher cost," IBA, an association of banks, said. To give you a perspective, it said, "suppose your loan outstanding is Rs 1,00,000 and you are charged 12 per cent rate of interest on your loan, then every month you are liable to pay Rs 1,000 as interest. In case you opt not to service the interest every month, you are liable to pay interest at 12 per cent per annum, and accordingly you will pay Rs 3,030.10 at the end of 3rd month". Similarly, in case the interest rate is 10 per cent, you are required to pay Rs 833 per month, or Rs 2,521 after three months, it added. Concerning credit card dues, IBA said, there is a requirement to pay a minimum amount and if it is not paid the same gets reported to Credit Bureaus but in view of the RBI circular, the overdue in the credit card account do not get reported to the credit bureaus for a period of three months. "However, interest will be charged by the credit card issuer on unpaid amount. You should check from your card provider to arrive at interest payable. Although no penal interest will be charged during this period, you must remember that the interest rate on credit card dues are normally much higher compared to normal bank credit and you should take a decision accordingly," it said. PNB Housing Finance said that there will be an increase in balance tenure by three months and a possible rise in EMIs for those customers opting for the moratorium. DP HV CS ANZ MRMR

EMI moratorium: Borrowers unlikely to get significant gains; banks to charge interest later

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RBI unlikely to cut interest rate in 2024, food inflation to be deciding factor, says SBI chief Setty

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