Best printers for Home

Best Mixer Grinder

Best wired Earphones

Best 43 Inch TV in India

Best Wi Fi Routers

Best Home Theatre in India

Smart Watch under 5000

Best Laptops for Education

Best Laptop for Students

<ul><li>After a rate cut in February, the mandate of the central bank was clear: it wants to boost lending and thereby stimulate economic growth. </li><li>However, the country’s commercial lenders have been slow to pass on the rate cut to consumers. </li><li>As a result, the governor of the Reserve Bank of India, <keyword id="6359111" type="UNKNOWN" weightage="20" keywordseo="Shaktikanta-Das">Shaktikanta Das</keyword>, met with the CEO’s of the country banks to do so. The banks complained that they didn’t have much room to cut rates but said they would try their best. </li></ul>After <a href="https://www.businessinsider.in/rbi-policy-update-cuts-interest-rate-citing-low-inflation-and-it-may-boost-growth/articleshow/67880230.cms">a rate cut </a>in February, the mandate of the central bank was clear: it wants to boost lending and thereby stimulate economic growth as the country heads into national elections. And now it wants Indian banks to follow suit. However, the country’s commercial lenders have been slow to pass on the rate cut to consumers in the form of cheaper small business loans, home loans and car loans. As a result, the governor of the Reserve Bank of India, Shaktikanta Das, met with the CEO’s of the country banks - such as Punjab National Bank, ICICI Bank, Kotak Bank, Bank of Baroda etc - yesterday to exhort them <a href="https://www.business-standard.com/article/finance/rbi-governor-das-asks-bankers-to-pass-on-rate-cut-benefits-to-consumers-119022101292_1.html">to cut lending rates</a> for customers so as to encourage consumer confidence and investment. While the banks’ response was mostly non-committal, they said they would <a href="https://www.thehindu.com/business/will-try-to-pass-on-rate-cut-banks/article26333312.ece">try their best to cut rates</a> on home loans and personal loans. They have complained in the past of their high borrowing costs and shrinking margins - both of which are a consequence of their stock of bad loans. They also pointed to a lack of liquidity in the banking system, as consumers are hoarding cash ahead of elections. After the rate cut decision, wherein the base lending rate was cut by 25 basis points to 6.25%, the State Bank of India only cut home loan rates by <a href="https://economictimes.indiatimes.com/markets/stocks/news/sbi-cuts-interest-rate-on-home-loan-by-5-bps/articleshow/67910450.cms">a mere 5 basis points</a>. The only other bank to do the same was Bank of Maharashtra - by the same measly amount. Earlier this week, the chairman of State Bank of India, Rajnish Kumar, said that banks did not <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/headroom-to-cut-rates-does-not-exist-sbi-chairman/articleshow/68044675.cms">have the room to cut lending rates</a> because it would need to cut its deposit rates first. And it couldn’t do this unless other banks did so as well, because otherwise its customers would park their money in banks with higher deposit rates. SEE ALSO: <a href="https://www.businessinsider.in/rbi-policy-update-cuts-interest-rate-citing-low-inflation-and-it-may-boost-growth/articleshow/67880230.cms">India’s central bank cuts interest rate to give growth a chance</a> <a href="https://www.businessinsider.in/rbi-pays-interim-dividend-central-government/articleshow/68057230.cms">The Modi administration’s overspending gets rewarded with an interim dividend from the central bank</a>

India’s central bank is calling on the country’s lenders to lower rates

<ul><li>As expected, RBI cut repo rate by 25 basis points or 0.25% </li><li>It also kept its stance as accommodative. </li><li>BSE Sensex rose 200 points in the morning anticipation of a sharp rate cut. </li></ul>Indian central bank today cut the repo rate by 25 basis points, and retained its accommodative stance. This is the fifth consecutive rate cut, brings interest rate to 5.15% at which the Reserve Bank of India (RBI) to banks. The RBI has cumulatively cut interest rates by 1.35% as of now, in multiple cuts. In the last monetary policy, it went ahead with a 35 basis point rate cut, which was unprecedented. RBI also reduced its growth rate projections for the current financial year to 6.1% from 6.9% earlier. The stock markets have been predicting a 25 basis point or higher rate cut and BSE Sensex rose 200 points in the morning in anticipation. “We pencil in a 40 bps of rate cut which should be a signal to the market that the Monetary Policy Committee is not quite done as it front loads the remaining couple of rate cuts in the cycle,” said Suvodeep Rakshit, Vice President &amp; Sr. Economist, Kotak Institutional Equities. RBI has been saying that growth will be a primary concern. In the first quarter of the financial year, the economy grew at 5% instead of the estimated 5.8-6.6% the first half. “With inflation remaining within its comfort range, despite recent onion price increases, revisions to its growth forecast warrant a sharper-than-usual rate cut in the October policy,” said Rakshit. Experts also believe that a chunky rate cut would speed up the slow transmission of rate cut benefits by banks to consumers. “The monetary policy expectation is not just limited to rate cuts. While aggregate liquidity conditions have improved, transmission remains slow. The RBI’s assessment of the same will be critical,” said a report by Edelweiss Research.

RBI cuts interest rate by 25 basis points and lowers GDP forecast to 6.1%

<ul><li><keyword id="1012551" type="PERSON" weightage="20" keywordseo="RBI-cuts">RBI cuts</keyword> repo rate by 25 basis points to 5.75% from 6% in a unanimous decision.</li><li>Monetary policy stance changed to ‘accommodative’ from neutral. </li><li>RBI revised the GDP growth downwards to 7% for 2019-20 from 7.2% during the April policy rate. </li></ul> India’s central bank cut the repo rate by 25 basis points to 5.75% from 6%, in its bi-monthly policy statement today. This is the third consecutive rate cut after similar cuts in April and February this year. The monetary policy committee or MPC changed the monetary policy stance to ‘accommodative’ from neutral. “The decision to cut the rate and the change in stance is unanimous. It reflects the resolve of the MPC to act decisively and in a timely manner,” the RBI governor Shaktikanta Das said at the ongoing press conference. Higher and Faster Transmission Das also said that central banks across the world have turned accommodative. He is also confident that three rate cuts accounting to 75 basis points this year will be translate it to loans, said the Governor who delivered a hatrick after cutting rates in February and April this year. “The expectation is that the rate transmission will be higher and faster too. The effect will be seen in new consumer loans too,” Das said. The <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> also has revised the GDP growth downwards from 7.2% during the April policy rate cuts, to 7% for 2019-20. Repo rate is the rate at which RBI lends money to <keyword id="187928" type="ORGANIZATION" weightage="20" keywordseo="commercial-banks">commercial banks</keyword>. Any cut in this rate, will ease stress in the economy and increase liquidity as banks can borrow at a cheaper rate. This rate also becomes the base rate at which banks determine their own lending rates. As per expectations A lot of experts and agencies expected a 25 basis points rate cut, if not more. The stock markets have been rallying on expectations that the banks might get a lease of life, amidst many problems that they face. Yet, there are doubts whether the benefits of this rate cut will be transmitted by the banks to the borrowers. It has happened many times that the banks absorbed the rate cut advantages without passing on the benefits to the industry or the consumers. While Das took no steps to ensure that it will be transmitted, he said that 21 basis points have already been transmitted by banks. He had cut rates earlier in April and February too. “We expect RBI to spell clearly its stand on how a large cut if impacted will lead to better transmission: will the banks be now mandated for benchmarking their asset and liability moving together? Otherwise, banks will not rate cut deposit rates given the huge currency leakage,” said Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India. Is it enough? The rate cut was much expected yet is believed to fall short for a stimulus that the economy desperately needs. India’s fourth quarter GDP numbers came in at 5.8%, which was lower than expectations. Many experts have revised the growth numbers for the year downwards, and expect the pressure to continue till October. “We see further downside risks to growth as we await the reforms to begin bearing fruit in the medium term. We expect 2019-20 GDP growth to remain muted at 6.8%, with slowdown in the first half likely to continue and some improvement in consumption and investment likely in the second half,” said Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank. As per SBI’s predictions, the growth rate will stay below 6%, at least in the first half of 2019-20 and will only recover in the second half. “Global growth is fast turning out to be an Achilles’ Heel,” added Ghosh.

RBI cuts repo rate by 25 basis points; expects faster and higher transmission of benefits

<ul><li>RBI cuts repo rates by 35 basis points, higher than expectations of 25 basis point cut </li><li>The effective rate at which RBI will now lend to banks is at 5.4%. </li></ul>The Reserve Bank of India (RBI) today cut its key lending rates by 35 basis points or 0.35%, which is higher than market expectations. This the fourth consecutive repo rate cut that RBI has done, after cutting rates by 25 basis points for the last three policies. The effective rate at which RBI will now lend to banks is at 5.4%. RBI Governor Shaktikanta Das today said that they chose to cut rates by 35 basis points instead of the conventional 25 basis points as the latter might turn out to be inadequate due to current macroeconomic conditions. “The size of the rate cut should be calibrated to the dynamics of the situation. With inflation within target, addressing growth concerns especially private investment is of the highest priority,” Das said in the press conference. This will help increase credit and money supply in the market to reignite the sputtering growth engines. Das said that 50 basis points have been excessive, so 35 basis point cut is balanced. The central bank projected an inflation of 3.1% for the second quarter of 2019-20. It also cut its GDP growth estimate to 6.9% from 7% for the current financial year. Unpleasant arithmetic India’s economic growth slipped to 5.8% at the end of the March quarter, the <a href="https://www.livemint.com/news/india/core-sector-growth-flat-in-june-q1-fiscal-deficit-at-61-4-of-full-year-target-1564573772025.html">slowest quarter </a>in five years. Things have turned for the worse since then. “The month of August has always unpleasant arithmetic. Banks will cut deposit rates further and lending rates will witness a faster incremental fall in coming months. This could aid recovery, but it is unlikely before late Q3FY20,” said a report by SBI Ecowrap on the month’s RBI policy. A few experts also believed that RBI could wait and watch, though a majority expect a cut since they do not have to worry about inflation which is not high--a factor that could derail a possible cut. “The RBI may also like to wait for another two months to be sure of the inflation path before lowering rates further as it has been indicated that the RBI has so far virtually lowered rates by 100 bps – three times through the repo and once by changing the stance to accommodative,” said a report by CARE Ratings. A mountain of bad loans Banks, caught between a cash crunch and a mountain of bad loans, have not reduced lending rates despite many nudges and winks from the regulator as well as prodding from the <a href="https://www.hindustantimes.com/business-news/59-minute-loan-approval-among-steps-to-spur-growth/story-rhdDgZCulouEEoOY3PRkuM.html">Finance Minister Nirmala Sitharaman</a>. “The transmission of rate policy action has been less than satisfactory and the RBI may work on nudging banks to do so instead of lowering the rate once again,” said CARE. Non-banking financial companies or NBFCs, companies that aren’t banks but make loans, are facing liquidity crunch and the crisis is deepening. They, in turn, have stopped lending which has further slowed down the economy particularly in spaces like automobiles and real estate. Monthly auto sales, for instance, fell for the ninth straight month in July.

India's central bank cuts interest rate for the fourth time this year

<ul><li>This is India's first rate cut in 18 months. </li><li>Furthermore, the central bank changed its stance to “neutral”, indicating a possibility of another rate cut in the next few months. </li><li>After retail inflation crashed to a 18-month low in December 2018, it was widely expected that the RBI would have enough leeway to cut rates this month. </li></ul>The Reserve Bank of India (RBI) opted to cut <keyword id="6371181" type="UNKNOWN" weightage="20" keywordseo="interest-rates">interest rates</keyword> by 25 basis points to 6.25%. Furthermore, the central bank, which is now headed by government insider <keyword id="6359111" type="UNKNOWN" weightage="20" keywordseo="Shaktikanta-Das">Shaktikanta Das</keyword>, changed its stance to “neutral”, indicating a possibility of another rate cut in the next few months. Markets had already run up on Wednesday hoping for this slash in interest from the RBI. Benchmark indices, Sensex and Nifty, continued to hold on to the gains after the decision. After retail inflation crashed to <a href="https://www.businessinsider.in/no-low-inflation-is-not-always-a-good-thing-heres-why/articleshow/67541528.cms">a 18-month low</a> in December 2018, it was widely expected that the RBI would have enough leeway to cut rates this month after having to hike rates consecutively in June and August last year and maintaining a “calibrated tightening” stance in December. However, the <keyword id="6354642" type="PERSON" weightage="20" keywordseo="Modi">Modi</keyword> administration’s expansionary budget put a question mark around those plans. A cash handout scheme for farmers, a pension scheme for informal sector workers and tax breaks for the middle class have raised the probability of fiscal slippage. The stimulus package was expected to have an inflationary effect, which is why many thought that the RBI would opt for a wait-and-see approach. In June 2018, the central bank hiked rates for the first time in four years in response to higher inflation and a depreciating rupee - both of which were a outcome of rising fuel prices. The last time the RBI opted for monetary tightening was in January 2014, when it increased the repo rate to 8% to keep inflation in check. It had since reduced interest rates to support economic growth amid a global decline in oil prices. 
 



 
 
 
 
 <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[
<div class="flourish-embed" data-src="visualisation/216306"></div>
]]></cdata></div>











 As fuel and food prices have moderated in recent months, the latter due to oversupply in the agricultural sector, inflation has been consistently trending downwards. Furthermore, having stalled at 3.6% for 2018-19 and 2019-2020, retail inflation is well below the RBI’s target of 4%, which had raised the prospects for a rate cut. 
 
 
 
 









 
 
 
 
 <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[
<div class="flourish-embed" data-src="visualisation/216301"></div>
]]></cdata></div>











 Excluding food and fuel, core inflation has hovered around the 6% owing to higher medical and education costs. The divergence across different inflation baskets has caused the RBI to opt for conservatism when it comes to interest rate decisions. With the inflation outlook subdued, amid lower crude prices, the RBI likely felt the need to cut rates to spur economic growth. More importantly, ahead of national elections in May, a reduction in the cost of home loans and short-term loans for working capital is expected to lead to higher consumer and business confidence. SEE ALSO: <a href="https://www.businessinsider.in/india-markets-update-sensex-nifty-recover-late-and-moodys-on-budget-fiscal-deficit-target/articleshow/67831968.cms">Markets just can't believe India's latest budget math</a> <a href="https://www.businessinsider.in/heres-why-the-reserve-bank-of-india-hiked-interest-rates-for-the-first-time-since-january-2014/articleshow/64490708.cms">Here’s why the Reserve Bank of India hiked interest rates for the first time since January 2014</a>

India’s central bank cuts interest rate to give growth a chance

<ul><li> The market is expecting RBI to cut its interest rates yet again by 25 basis points. </li><li>The RBI is expected to continue its accommodative stance. </li><li>RBI could also revise GDP growth projections to the lower end, for the fiscal. </li></ul>India’s central bank might continue with its efforts to stimulate the slowing economy, just like the finance ministry. The market is expecting the RBI to cut interest rates yet again, after last monetary policy’s unexpected 35 basis point cut. “Based on the benign inflationary trends and lingering growth concerns, we expect RBI to cut the policy repo rate by 25 bps in the October MPC meet. The RBI will continue to maintain its stance at accommodative as the risks to inflation are limited,” said a report by CARE ratings. This is widely expected as the factors that influenced last 4 rate cuts have remained the same—inflation has remained low which means an increase in interest rates will not make food and essential items costlier for public. For the year, consumer price index or CPI inflation would be at 4%. The RBI also has to address the slowing economic rate. Moreover, the first quarter earnings of most companies have been tepid, not to mention the mounting problems of slowing auto sales, resulting in halted production and job cuts. “Given the significantly lower GDP growth for Q1 of 2019, RBI could revise the GDP growth lower for the fiscal. CARE Ratings expects GDP growth to be in the range of 6.4-6.5% for the fiscal,” the report said. <keyword id="7830347" type="UNKNOWN" weightage="20" keywordseo="banking-sector-crisis">Banking sector crisis</keyword> Yet, growth is not the only worry RBI has. The ongoing <a href="https://www.businessinsider.in/pmc-bank-news-and-updates-in-pictures-after-rbi-sets-deposit-withdrawal-limit/articleshow/71279746.cms">crisis at PMC bank</a> which disallowed depositors to withdraw money has caused widespread fears on the stability of the banking sector. Not only are most depositors worried, there are rumours that multiple banks will fall into a similar crisis mode. However, the RBI and Finance Ministry both have been making statements that the system is stable,<a href="https://economictimes.indiatimes.com/news/economy/finance/amid-pmc-crisis-rbi-says-indian-banking-system-stable/articleshow/71394695.cms"> constantly assuring</a> panicked customers. At this monetary policy, the RBI governor Shaktikanta Das will have to do more than allay fears, he will have to address the concerns of crores of depositors who are worried that their money is in the wrong hands.

RBI will have to do more than cut repo rate like address PMC and other crises

<ul><li>Shaktikanta Das told the Times of India that public sector banks have certain social and macro-economic responsibilities and the ongoing consolidation model should be given time.</li><li>‘NBFCs with governance issues will be treated differently with intense regulations.’</li><li>The earlier light-touch approach will have to be suitably modulated in keeping with today’s requirements, Das said on NBFCs.</li></ul> The RBI governor would like to merge and reduce the number of government banks before any talks of selling them off to private players. While Shaktikanta Das said that the decision to privatise banks lies with the government, he also lent voice on the issue. “The questions of privatisation, etc, can be addressed later. Now, we have to focus on the model that has been adopted (of large, consolidated banks),” Das told <a href="https://timesofindia.indiatimes.com/business/india-business/privatisation-can-wait-give-time-to-see-results-of-banks-consolidation/articleshow/70322578.cms?UTM_Source=Google_Newsstand&amp;UTM_Campaign=RSS_Feed&amp;UTM_Medium=Referral">Times of India</a>. He added that the public sector banks have certain social and macro-economic responsibilities and the ongoing consolidation model should be given time. India had 21 government banks in 2018 before the mega merger of Vijaya Bank and Dena Bank with Bank of Baroda. In 2017 too, SBI merged with five of its affiliates and Mahila Bank. The government intends to merge banks and create at least four global-sized banks. In the Budget, finance minister Nirmala Sitharaman said that they brought down the number of government banks by eight. The government is <a href="https://www.livemint.com/industry/banking/finance-ministry-starts-groundwork-for-fresh-bank-consolidation-1558945007770.html">reportedly considering </a>a fresh round of mergers too. India has a large number of public sector banks after a historic decision by former Prime Minister Indira Gandhi to nationalise 17 private banks, and bring it under the government wing. Curbing a crisis Das intends to keep non-banking financial companies (NBFCs) on a tight leash. A crisis has been unfolding in India’s shadow banks or NBFCs-- the ones that lend money but do not take public deposits-- since the crash of the gigantic IL&amp;FS, which made loans to infrastructure projects. Not only has it caused a cash crunch in the system, but also revealed a lot of dirt in governance in these companies. “The earlier light-touch approach will have to be suitably modulated in keeping with today’s requirements and anticipated developments,” said Das. A few weeks back, in the Budget, Sitharaman armed the RBI with ‘more powers’ to tackle NFBCs and the crisis that has been unfolding over the last many months. With financial stability high on his mind, Shaktikanta Das told the <a href="https://timesofindia.indiatimes.com/business/india-business/privatisation-can-wait-give-time-to-see-results-of-banks-consolidation/articleshow/70322578.cms">Times of India </a>that those NBFCs with governance issues will be treated differently with intense regulations. At the same time, he also said that NBFCs in general will be provided liquidity support, as banks have stalled lending to them after IL&amp;FS turned insolvent last year. He however <a href="https://economictimes.indiatimes.com/markets/stocks/news/rbi-in-sync-with-government-efforts-to-accelerate-growth-shaktikanta-das/articleshow/70322831.cms">denied the </a>sector’s request to gain ‘clean, unsecured money’ directly from the regulator. Accomodative stance When asked about a possible cut in base rates yet again, Das said that they have already provided the market with 75 basis points rate cut. Added to that, they have taken an ‘accomodative stance’ which itself implies another 25 basis point rate cut, taking the effective cut to 100 basis points. This, according to him is ‘adequate’ liquidity which is being sent into the system. RBI, under Das’ stewardship is working with the government to ensure growth and ‘accelerate economic expansion’. Its efforts are in sync with that of government to make sure there is credit growth. “I believe in having consultations with all stakeholders and the government is much more than a stakeholder,” he told TOI.

Bank mergers before privatisation is one of three biggest headlines from RBI governor Shaktikanta Das’ interviews

<ul><li>Banks have passed on only 29 basis points of rate cut benefits to customers, even as RBI eased lending rates by 100 points since February. </li><li>RBI Governor says he will take whatever steps necessary to ensure banks pass on benefits. </li><li>Das also said that the system is flush with liquidity and it will help push growth. </li></ul> The RBI governor Shaktikanta Das today said that they are willing to take whatever steps necessary to make sure banks transmit the benefits of interest rate cuts to customers. The central bank has been trying to kickstart a slowing economy by reducing the interest rates at which it lends money to banks. However, banks have been absorbing these benefits, as less is seeping through to customers. “RBI is monitoring this regularly. We have been meeting both public and private sector banks separately,” Shaktikanta Das said in a press conference. A dismal 29 for 100 Even before the central bank cut its repo rate <a href="https://www.businessinsider.in/rbi-cut-interest-rates-by-35-basis-points-as-growth-sputters-and-inflation-cools/articleshow/70565859.cms">by 35 basis points </a>today, it had eased its own lending rate by around a 100 basis points or 1%, since this February. This includes three 25 basis point cuts along with changing stance to accommodative, which adds another 25 basis point worth benefits. Yet, as per RBI’s own admission, banks have only passed on 29 basis points of the benefit to its customers. If banks do not pass on the benefits, it will not help kickstart urban and rural demand which has been slowing down, as observed with tractor and passenger car sales. ‘RBI has done its part’ Making sure banks are actively working towards growth like RBI is, is much more necessary in the current situation. The central bank reduced this year’s growth projection to 6.9% from 7%, earlier. “The RBI has done its part. We believe it is a cyclical downturn not a structural reform as of now,” said governor Shaktikanta Das, saying that there is room for structural reform. With adequate measures from the government, growth should pick up pace as the central bank believes that the second half of the year will grow at 7.3%, though the first half grew only at 5.8% As credit flow will pick up as banks go ahead and lend more at lower rates, the economic growth will start picking up, RBI believes. Das also said that the system is flush with liquidity and it will help push growth. “Banks just come out of non-performing assets (NPA) with continuous quarters of loss incurred. Some of them are turning around, and credit flow will improve and weeks and months,” Das assured. See also <a href="https://www.businessinsider.in/rbi-policy-update-home-loans-up-to-20-lakh-get-priority-status/articleshow/70567010.cms">Home loans up to ₹20 lakh may get cheaper and easier</a>

RBI is pushing India's stubborn banks to cut lending rates

<ul><li>India’s largest private sector bank <keyword id="6354731" type="UNKNOWN" weightage="20" keywordseo="state-bank-of-india">State Bank of India</keyword> (SBI) is yet again reducing the interest rates on term deposits across all maturities. </li><li>From now on, the <keyword id="3159390" type="PERSON" weightage="20" keywordseo="marginal-cost">marginal cost</keyword> of funds based lending rate (MCLR) for a year will be 8.15% per annum. </li><li>In view of the falling interest rate scenario and surplus liquidity, SBI also realigns its interest rate on term deposits (TD) w.e.f. September 10. </li><li> Recently, the Reserve Bank of India reduced the repo rates by 110 bps.</li></ul>India’s largest private sector bank State Bank of India (SBI) will reduce the interest rates on term deposits across all maturities, starting tomorrow i.e. 10 September 2019. The bank slashed the retail term deposit rates by 25 bps or 0.25%. The bulk term deposit rates have slipped by 10-20 bps. "In view of the falling interest rate scenario and surplus liquidity, SBI also realigns its interest rate on term deposits (TD) w.e.f. September 10,” the bank said. However, while this might come as bad news for those who want to store their money in FDs, those keen on taking loans have some good news in store. The bank also announced a reduction in marginal cost of funds based lending rate (MCLR) by 10 bps. Given that, the MCLR for a year will be 8.15% per annum — which is currently at 8.25%. This is the fifth year that the bank has cut MCLR. Recently, the Reserve Bank of India (RBi) reduced the repo rates by 110 bps, and asked the banks to trim the interest rates in favour of the customers. Under this, the borrowers will directly benefit from the RBI rate cuts.

SBI will cut interest rates on fixed deposits and term deposits by 0.25%

<ul><li>The Reserve Bank of India (RBI) Governor <keyword id="6359111" type="UNKNOWN" weightage="20" keywordseo="Shaktikanta-Das">Shaktikanta Das</keyword> was doling out optimism to the market at today’s Monetary Policy Committee (<keyword id="6369693" type="UNKNOWN" weightage="20" keywordseo="MPC">MPC</keyword>) briefing. </li><li>The MPC will be expanding the limit of open market operations (OMOs), providing on-tap TLTRO of ₹1 lakh crore, and introducing State Development Loan (SDL) OMOs.</li><li>While these measures may ease some tensions in the short run, the markets still seek predictability and interest rate cuts. </li><li>Das said that both the apex bank and markets can operate in the same space in competition without necessarily being combative. </li></ul>The Reserve Bank of India (RBI) Governor Shaktikanta Das delivered a <a href="https://www.businessinsider.in/policy/economy/news/rbis-mpc-keeps-the-policy-rates-unchanged-to-maintain-accommodative-stance-for-inflation/articleshow/78566955.cms">chipper note</a> on India’s recovery today. According to him, even though there’s some disconnect between the RBI and the markets, all will be well — soon. However, what the market participants want is for the RBI to acknowledge that the economy is in deep trouble and, therefore, cut interest rates further, boost money supply, and ease credit. <div type="Article" hostid="261" msid="78566955" title="RBI says it has decided to 'look through' the current 'high inflation' as it won’t last long⁠ but leaves interest rates unchanged" mstype="2" mssubtype="0"></div> The deep contraction of economic growth witnessed in the first quarter is behind us, he said, while emphasising that some silver linings are already visible. However, not all that glitters is gold. “We remain circumspect about generalising these early greenshoots, as they have benefitted from base effects and one-off shifts in some sectors,” said ratings agency ICRA. Despite Governor Das’ attempt to ease those tense nerves in the market, the argument seems far from over. “The <keyword id="64190" type="POSITION" weightage="20" keywordseo="RBI-Governor">RBI governor</keyword>'s push for optimism is bordering on the edge of hope,” said Sushil Kedia, the founder of KEDIANOMICS. “What's going to happen over the next one month or three is anybody’s guess.” <div type="image" title="India gdp by quarter" msid="78574635" hostid="261" caption="&amp;lt;p&amp;gt;India&amp;#39;s GDP numbers over the last two years and RBI&amp;#39;s expectations for the second half of the fiscal year&amp;lt;/p&amp;gt;"></div> The question to ask here is not who is right and who is wrong, but what happens if any one of them is wrong. If the markets are wrong and the economy recovers by March 2021, they will be in for a surprise. However, if the RBI is wrong and the economy is worse off than the picture painted by the Governor, the implication may be more dire for everyone in the country. Not just growth, RBI hopes the inflation wave will also ebb on its own “MPC has decided to look through the current inflation as a transient hump,” Governor Das explained, adding that inflation will ease between January and March next year. However, Kedia is less sanguine than the RBI Governor. “The interest rate cycle has been so overstretched and soft for so long, that I do see signals in long term data analysis, that at any point far sooner than one would expect, some global events will start reversal of the interest rate cycle,” he said. <div type="image" title="INflation india (1)" msid="78574672" hostid="261" caption="&amp;lt;p&amp;gt;Inflation in India since the outbreak of the coronavirus pandemic in the country&amp;lt;/p&amp;gt;"></div> “The relative economic growth differential between China and the rest of the world is almost 13-14%,” he added. The point Kedia is making is that if inflation rises in the rest of the world, even India will have to raise interest rates to tackle the prices, and the RBI is not preparing for it. While not the most obvious possibility, only time will tell if Kedia’s fear is proven right. RBI’s efforts have been lauded but in parts While the RBI has opened the liquidity taps time and again, a big concern in the market is that both central and state governments need to borrow more and more to meet the rising expenses due to the pandemic. The RBI said that it would buy long-term bonds — issued by both states and the centre — on tap worth ₹20,000 crore, up to ₹1 lakh crore in the coming days. <div type="image" title="india govt debt" msid="78574919" hostid="261" caption="&amp;lt;p&amp;gt;Indian government owes lenders more than &amp;#8377;101 trillion&amp;lt;/p&amp;gt;"></div> That would provide the money states need, but it will also mop up the funds that would have otherwise been available for private borrowers. In these challenging times, it is believed that lenders would rather give money to a government than risky private parties. And that would mean that the borrowing rates for private companies will remain higher than what it should have been. “It also remains to be seen if the commitment to facilitate state and central government borrowing, as well as the explicit signals aimed at softening yields, are adequate for bond markets to shrug off concerns regarding the fiscal health of the central and state governments,” ICRA pointed out. Back to the demand for another rate cut Essentially, private borrowers are back to seeking interest rate cuts, which the RBI seems reluctant to execute at this point. “These (measures announced today) should be beneficial for banks who are comfortable with the credits of corporates to lend as banks' borrowing rates are fixed. In case the repo rates are cut again, banks can refinance at lower rates also,” said Murthy Nagarajan, the head of fixed income at Tata Mutual Fund. <div type="image" title="Copy of TCS share price 2" msid="78575065" hostid="261" caption="&amp;lt;p&amp;gt;Nifty 50 closes above 11,900 points after RBI&amp;#39;s announcement today&amp;lt;/p&amp;gt;"></div> Instead of directly cutting rates, the RBI has offered up open market operations (OMOs), which — according to Abhishek Goenka, the founder and CEO of India Forex Advisors (IFA) — will help bring borrowing rates down in the commercial paper market. OMOs are conducted by the central bank to give or take currency from a bank or group of banks by buying or selling government bonds on the open market. It’s an instrument banks can use to increase or shrink liquidity in the market. “RBI was doing OMOs on an ad hoc basis,” explained Goenka, essentially saying that while RBI may be taking necessary steps, they haven’t been very predictable. And markets hate surprises. <div type="image" title="Copy of nifty50" msid="78575238" hostid="261" caption="&amp;lt;p&amp;gt;India&amp;#39;s 10-year bond yeilds over the last one month&amp;lt;/p&amp;gt;"></div> Until September 30, it wasn’t clear how cash-strapped state governments would find the money to meet the additional expenses in the wake of the pandemic. The markets are glad that RBI has opened up the emergency borrowing window — called ways and means advances or WMA — <a href="https://www.businessinsider.in/policy/economy/news/india-leaves-borrowing-calendar-unchanged-target-remains-at-12-lakh-crore/articleshow/78407506.cms">until the end of the fiscal year by 60%</a>. WMA essentially means that governments can borrow directly from the RBI to meet their emergency needs. That leaves more money in the market for private borrowers. While the decision came just in time, there was enough fear and chaos in the run-up to it. What the markets want are predictability and interest rate cuts. Meanwhile, the Governor has asked the market to keep the faith. “We look forward to cooperative solutions for the borrowing program for the second half of the year… These views can be competitive without being combative,” he said. SEE ALSO: <a href="https://www.businessinsider.in/policy/economy/news/rbis-mpc-keeps-the-policy-rates-unchanged-to-maintain-accommodative-stance-for-inflation/articleshow/78566955.cms">RBI says it has decided to 'look through' the current 'high inflation' as it won’t last long⁠ but leaves interest rates unchanged</a> <a href="https://www.businessinsider.in/business/corporates/news/tcs-beats-accenture-to-become-the-worlds-most-valuable-it-services-company/articleshow/78566487.cms">TCS beats Accenture to become the world’s most valuable IT services company — but this not the first time it has raced ahead</a> <a href="https://www.businessinsider.in/india/news/union-minister-ram-vilas-paswan-dies-at-74/articleshow/78558640.cms">India's consumer affairs minister Ram Vilas Paswan passes way at 74</a> <a href="https://www.businessinsider.in/science/space/news/mars-will-appear-bigger-redder-and-brighter-on-october-13-and-wont-get-this-close-to-earth-again-until-2035/articleshow/78556539.cms">Mars will appear bigger, redder, and brighter on October 13 — and won’t get this close to Earth again until 2035</a>

RBI Governor wants markets to keep the faith but traders want something more

The Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) has started its three-day monetary policy committee (MPC) meeting in Mumbai on Tuesday. The meeting will conclude on Thursday, when the RBI will announce its decisions on the <keyword id="20094323" type="General" weightage="100" keywordseo="repo-rate" source="keywords">repo rate</keyword> and other matters. The repo rate, which has been maintained at 6.5 per cent since it was last increased in February 2023, is widely expected by experts to remain unchanged for the ninth consecutive bi-monthly policy review. Experts highlight that <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> in India remains above the RBI's target range, making it unlikely that the central bank will implement policy cuts until inflation reaches the target of 4 per cent. However, the expert added that the RBI may consider rate cuts in the October meeting. Banking expert Ashutosh Khajuria commented: "Monetary Policy Committee (MPC) may continue to hold the policy signalling Repo rate and wait for <keyword id="19979707" type="General" weightage="20" keywordseo="Consumer-Price-Inflation" source="keywords">Consumer Price Inflation</keyword> to decisively fall below 4 per cent, the target rate. For the present, the continuation of the current stance is widely expected. MPC in India may change the stance and rate action by the beginning of the second half of the year in their October meeting at the earliest." The experts also noted that while <keyword id="20196112" type="General" weightage="20" keywordseo="core-inflation" source="keywords">core inflation</keyword> has been contained and commodity prices, particularly metals, have dropped by 15-20 per cent from their 2024 peak, food inflation remains a concern and needs to be closely monitored to ensure stability in overall CPI numbers. The Managing Director of a major bank, who preferred not to be named, told ANI: "During the last policy meeting we could see some voting in favour of a <keyword id="19920203" type="General" weightage="20" keywordseo="rate-cut" source="keywords">rate cut</keyword>. At the same time, we could see The Reserve Bank of India's (RBI) Governor Shaktikanta Das on July 11 said it is too early to talk on the interest rate cut due to the uncertain economic environment and inflation remaining close to five per cent. Considering both, our expectation is that the rate cut cycle may start from the next meeting and no change in <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> this time." RBI Governor Shaktikanta Das had also emphasised in the last policy briefing that food inflation is still a concern and that the regulator is not in a hurry to make a decision on rate cuts. A recent report by the State Bank of India (SBI) also noted that Consumer Price Inflation in India is expected to remain around 5 per cent for the financial year 2024-25, except for the months of September and October.

You Searched For "RBI Interest Rate Cut" and got 11 results

India’s central bank is calling on the country’s lenders to lower rates

Dilsher Dhillon

RBI cuts interest rate by 25 basis points and lowers GDP forecast to 6.1%

Katya Naidu

RBI cuts repo rate by 25 basis points; expects faster and higher transmission of benefits

Katya Naidu

India's central bank cuts interest rate for the fourth time this year

Katya Naidu

India’s central bank cuts interest rate to give growth a chance

Dilsher Dhillon

RBI will have to do more than cut repo rate like address PMC and other crises

Katya Naidu

Bank mergers before privatisation is one of three biggest headlines from RBI governor Shaktikanta Das’ interviews

Katya Naidu

RBI is pushing India's stubborn banks to cut lending rates

Katya Naidu

SBI will cut interest rates on fixed deposits and term deposits by 0.25%

BI India Bureau

RBI Governor wants markets to keep the faith but traders want something more

Prabhjote Gill

Repo rate cut unlikely in ongoing MPC meeting, but RBI may change it during October policy review: Experts

ANI

Popular Keywords

Buying Guides