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Mumbai: The Reserve Bank is unlikely to cut the benchmark <keyword id="20071327" type="General" weightage="20" keywordseo="interest-rate" source="keywords">interest rate</keyword> in its forthcoming bi-monthly monetary policy review later in the week as <keyword id="19999652" type="General" weightage="20" keywordseo="retail-inflation" source="keywords">retail inflation</keyword> is still a cause of concern, and there is a possibility of the Middle East crisis deteriorating further, impacting crude oil and commodity prices, say experts. Earlier this month, the government reconstituted the Reserve Bank's rate-setting panel -- <keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (MPC). The reconstituted panel, with three newly appointed external members, will commence its maiden meeting on Monday. MPC Chairman RBI Governor Shaktikanta Das will reveal the outcome of the three-day discussion on Wednesday (October 9). The <keyword id="19899810" type="General" weightage="100" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI) has kept the repo or short-term lending rate unchanged at 6.5 per cent since February 2023, and experts think some easing could only be possible in December. The government has tasked the central bank to ensure that Consumer Price Index (CPI) based retail inflation remains at 4 per cent with a margin of 2 per cent on either side. In the current context, experts feel that the RBI may not follow the US Federal Reserve, which lowered the benchmark rates by 50 basis points, and the central banks of some developed nations, which have reduced the interest rates. "We do not expect any change in the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> or stance by MPC. The reason is that inflation for September and October will be above 5 per cent, and the present low inflation is due to the base effect. Besides, core inflation is inching upwards," said Madan Sabnavis, Chief Economist, Bank of Baroda. Further, the recent Iran-Israel imbroglio can intensify, and there is uncertainty here, he said. "Hence, the status quo is the most likely option even for new members. Inflation forecast may be lowered by 10-20 bps and no change in GDP forecast likely," said Sabnavis. The central bank last hiked the repo rate to 6.5 per cent in February 2023 and since then, it has held the rate at the same level. Icra Chief Economist Aditi Nayar said that given the undershooting in the initial first quarter GDP growth relative to the MPC's forecast and the likely sizeable undershooting in the second quarter CPI inflation print as well, "we believe a stance change to neutral may be appropriate in the October 2024 policy review". This could be followed by a shallow rate-cutting cycle of 25 bps each in December 2024 and February 2025, she added. "The abundant monsoon offers some insurance for crop inflation. The impact of global political developments and geopolitical uncertainty on the growth inflation dynamics remains a risk," Nayar added. An HSBC report said three developments stand out -- softer growth numbers have trickled in recently, inflation has been falling, and the external environment has moved from rate hikes to cuts. "We believe the RBI doesn't gain from waiting any longer. We think it will change its stance from a hawkish 'withdrawal of accommodation' to 'neutral' in the upcoming 9 October policy meeting, followed by repo rate cuts of 25 bps each in the December and February meetings, taking the repo rate to 6 per cent," the report said. The RBI kept the repo rate unchanged at 6.5 per cent in its August bi-monthly review amid risks from higher food inflation. This was the ninth consecutive MPC meeting, which decided to maintain the status quo on the rate front. Pradeep Aggarwal, founder and chairman, Signature Global (India) Limited, said while the real estate industry, developer community, and homebuyers are hoping for an interest rate cut in the upcoming monetary policy review, the RBI is likely to hold on to the interest rate cuts for the tenth consecutive time. "The apex bank still seems uncomfortable with the overall retail inflation scenario, particularly food inflation. As such, it is expected to maintain the status quo. The recent interest rate cut by the US Federal Reserve has ignited similar hopes even in India, but the domestic scenario is very different," he added. SBM Bank India Head Treasury Mandar Pitale believed that the MPC has persistently advocated a restrictive policy until inflation aligns durably towards the 4 per cent target. "With the unfavourable base effect taking the next couple of CPI prints near 5 per cent plus or minus, it will pose a major challenge for MPC to start easing from the October meeting," Pitale said, adding that the MPC is also expected to deliberate upon the global factors like growth-inflation behaviour in developed economies. The government has appointed Ram Singh, Saugata Bhattacharya, and Nagesh Kumar as external members of the MPC. They have replaced Ashima Goyal, Shashanka Bhide, and Jayanth R Varma. Apart from the Governor, the other internal members are the RBI Deputy Governor in charge of monetary policy Michael Debabrata Patra and the Executive Director monetary policy department of RBI Rajiv Ranjan. In an off-cycle meeting in May 2022, the MPC raised the policy rate by 40 basis points and it was followed by rate hikes of varying sizes, in the subsequent meetings till February 2023. The repo rate was raised by 250 basis points cumulatively between May 2022 and February 2023.

Status-quo on interest rate likely, say experts ahead of RBI's policy review

<ul class="summary-list"><li><keyword id="23254035" type="General" weightage="20" keywordseo="home-improvement-retailers" source="keywords">Home improvement retailers</keyword> are among the first to see a lift from the Fed's rate cut.</li><li>Share prices for <keyword id="20320193" type="General" weightage="20" keywordseo="Home-Depot" source="keywords" meta.keywordsubtype="org" meta.entityname="Home Depot" meta.hostid="261" meta.entityid="Home Depot">Home Depot</keyword> and <keyword id="23254034" type="General" weightage="20" keywordseo="Lowes" source="keywords" meta.keywordsubtype="org" meta.entityname="Lowe's" meta.hostid="261" meta.entityid="Lowe's">Lowe's</keyword> are up, and <a target="_blank" href="https://www.businessinsider.com/fed-interest-rates-cut-jerome-powell-labor-market-mortgage-pantheon-2024-9">spending on projects is expected to follow</a>.</li></ul>The US Federal Reserve's decision Wednesday to <a target="_blank" class="" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">cut rates by half a percentage point</a> has created a flurry of immediate reactions, but the real effects of the policy are likely to take several months to bear out. Still, some areas of the economy are already seeing a lift in response to the news — and the fact that the Fed went with the larger of the two most likely options under consideration. <a target="_blank" href="https://www.businessinsider.com/comparing-lowes-vs-home-depot-2023-12">Home improvement retailers,</a> in particular, are among the companies who were primed to come out of the gate strong with a rate cut, and, true to form, shares for Home Depot and Lowe's were up as of Thursday's market close. "Home-related companies should soon see the beginnings of fundamental recovery exiting this year," Mizuho analyst David Bellinger told Business Insider. "Aside from any initial noise in the market, Home Depot and Lowe's should keep grinding higher as all this comes together." And while a rising <keyword id="19998639" type="General" weightage="20" keywordseo="stock-price" source="keywords">stock price</keyword> carries its own benefits for a company, the uptick is a signal of a much more important change still to come: sales. Executives for both Home Depot and Lowe's have characterized their businesses as being constrained by low housing turnover and high borrowing costs, both of which are results of the Fed's tight interest rate policy. Home Depot CFO Richard McPhail described his company's core customer as having "<a target="_blank" href="https://www.businessinsider.com/home-depot-earnings-americans-in-deferral-mindset-consumer-spending-2024-8">a deferral mindset</a>" in spite of being in a generally healthy financial position. In short, most <a target="_blank" href="https://www.businessinsider.com/americans-doing-less-diy-worrying-sign-economy-lowes-earnings-2024-8">big-ticket spending on home improvement</a> comes from one of two places: people buying and selling homes and homeowners renovating existing homes with borrowed money. Unless they have to fix something urgently, a lot of folks have decided they're better off waiting to upgrade. Fed Chairman Jerome Powell talked about the impact on the <keyword id="20759748" type="General" weightage="20" keywordseo="housing-market" source="keywords">housing market</keyword> in his remarks following Wednesday's announcement. "The housing market is in part frozen because of lock-in with low rates. People don't want to sell their home," he said. "As rates come down, people will start to move more, and that's probably beginning to happen already." What's more, Powell signaled in his speech that further cuts are likely if the data support them, which can encourage some of those sitting on the sidelines to go ahead with a new mortgage or credit line with the expectation that they can simply <a target="_blank" href="https://www.businessinsider.com/personal-finance/personal-loans/how-to-refinance-personal-loan">refinance</a> in a few months when rates come down further. Additionally, Home Depot and Lowe's have taken great care to manage investor expectations through the <a target="_blank" href="https://www.businessinsider.com/lowes-dicks-macys-sound-alarm-us-shoppers-spending-2023-8">slumping sales and slimmer profits</a> over the past year. In particular, both companies <a target="_blank" class="c-link" href="https://www.businessinsider.com/home-depot-1-billion-wage-boost-improved-worker-safety-satisfaction-2023-5">continued to invest in their stores</a> with the expectation that pent-up demand would eventually be unlocked. (Truist Securities analyst Scot Ciccarelli has referred several times to a "coiled spring" for the retailers.) Max Rakhlenko, a TD Securities analyst, said in a note on Wednesday that Lowe's management was expecting a "phased recovery" in which homeowners start with smaller projects before getting more comfortable with larger ones that require tapping into their house's equity. "We're aggressively working in this downturn," Lowe's CEO Marvin Ellison said during his earnings call last month, adding, "Whenever the macro inflection occurs, we just want to be ready to take advantage of it." It appears Ellison may not have to wait much longer. Correction: September 20, 2024 — An earlier version of this story misstated the day a TD Securities analyst sent out his note on Lowe's. It was Wednesday, not Thursday.

Home Depot and Lowe's are already seeing the first of many likely benefits from the Fed's rate cut

<div type="image" title="The RBI has cracked the regulatory whip on NBFCs and banks, who&amp;#39;ve been pushing microfinance and unsecured loans aggressively to grow their loan books." agency="ANI" msid="114778648" hostid="261" caption="&amp;lt;p&amp;gt;The RBI has cracked the regulatory whip on NBFCs and banks, who&amp;#39;ve been pushing microfinance and unsecured loans aggressively to grow their loan books.&amp;lt;/p&amp;gt;"></div> Imagine this. You have a younger sibling you’re mighty envious of. And why not? Unlike you, they seem to enjoy all the freedom and money in the world. They party like there’s no tomorrow, and here you are, stuck in a boring, ultra-disciplined but responsible routine that feels completely devoid of any independence, and mostly, funds. But of late, things are changing. This sibling is in massive trouble and just cannot escape the parent’s wrath anymore. Long story short, the party is over, and it is time to go back home. The rising defaults on this sibling’s part have now begun pulling the entire house down, thereby attracting the regulator’s ire. <h2>The Wild West of <keyword id="113684" type="General" weightage="20" keywordseo="microfinance" source="Orion">microfinance</keyword> and unsecured loans</h2>It's hard to ignore the issues with microfinance and unsecured loans in India. Many saw them as a small gamble and ignored the rising defaults much like the younger siblings’ tantrums, and now they find themselves in hot waters. The skyrocketing instances of non-payments aren't a micro-issue anymore and are threatening the stability of the entire banking system. In the quarter ended September 30, 2024, 5 of India’s 8 largest private sector <keyword id="19934118" type="General" weightage="20" keywordseo="banks" source="keywords">banks</keyword> reported a steep rise in their bad loan book, mostly thanks to microfinance loans. Some banks, in a bid to strengthen their fortress against these <keyword id="142154" type="General" weightage="100" keywordseo="bad-loans" source="Orion">bad loans</keyword>, have significantly upped their provisions. For instance, IndusInd Bank set aside Rs 525 crore during July and September 2024 to battle the menace of defaults on microfinance loans, which make up about 9% of its total loan book. See, banks rely heavily on their interest income, which they earn from advancing loans. Any loan where the borrower has not paid interest to the bank or defaulted for 90 days or more becomes bad, i.e. an NPA, or non-performing asset for the bank. And who likes things going bad? Simply put, there has been a steep rise in three areas, much to the dislike of banks and MFIs (micro-finance institutions). But hey, it's mostly their doing! <ol><li>GNPA ratio (gross net performing assets): The quantum of non-performing assets a bank has in proportion to its total assets.</li><li>Provision: The amount banks set aside to take care of such NPAs.</li><li>Slippage ratio: The rate at which good girls go bad, or the speed at which good loans turn into NPAs</li></ol>But how are these plaguing the Indian banking sector? And what does the road ahead look like? We decode it for you. <h2> Microfinance: A not-so-micro-menace</h2>Microfinance loans were initially brought forth for low-income households and individuals i.e. for those who might not generally have access to traditional ways of credit, like bank loans and more. They don’t require collateral or an asset to be pledged in lieu of the loan, making it a tad bit easier for borrowers. As of June 2024, the amount of outstanding loans in the microfinance industry stood at a staggering Rs 4,20,256 crore. Of this, NBFC-MFIs accounted for 40% and banks made for 33% of these. In 2022, RBI, in a bid to inspire some competition in this space, did something radical-they did away with the ceiling on how much interest MFIs could charge their customers. Previously, MFIs could add up to 12% to their cost of acquiring funds to determine the final interest rate chargeable to the consumer. So, assuming that Bank A incurs a 5% cost to acquire funds for further loaning, A could charge up to 17% interest from the end consumer. So, interest rates were in the hands of MFIs, and boy, did they have a gala time with it. Instead of spurring some healthy competition, as RBI expected, MFIs and banks went rogue and all guns blazing, competing for the title of “Who will charge the highest interest?” Recently, RBI banned 4 microfinance institutions (MFIs), namely Asirvad Micro Finance Limited, Arohan Financial Services Limited, DMI Finance Private Limited, and <keyword id="20117932" type="General" weightage="20" keywordseo="navi-finserv" source="keywords">Navi Finserv</keyword> from disbursing loans effective October 21, 2024. Why? Because they were charging 14% extra interest over their original cost of funds. To maintain their loan books (and pockets), banks and NBFCs resorted to shady practices like netting off loans, which RBI has now advised MFIs against. Here, lenders allow borrowers to settle a previous outstanding loan by issuing them a new loan! As crazy as it sounds, it helped banks to report less of their total assets as NPAs, since the new credit would cover pending instalments of the borrower’s previous loan. Then there was the issue of borrowers overleveraging, i.e. taking multiple loans using different IDs from various lenders and then failing to honour any of them. The consequence? Banks and NBFCs end up with massive NPAs. Data from credit bureaus suggests that over the last quarter, there was a 17.2% rise in the number of borrowers who had 5 or more active loans at the same time. <h2>Growth &gt; Caution</h2>It's an age-old tale unfolding yet again in India’s banking sector- Icarus flew too close to the sun and eventually, fell to its death. Between April and June 2024, NBFCs microfinance portfolio jumped by 2.7%. If you see this in terms of loan sources, microfinance loans issued by banks grew by 11.2% in Q1FY25. But the same portfolio in NBFCs swelled by almost double-23.9%. While most of these loans had an average ticket size between Rs 30,000-50,000, there was a sharp spike in the number of loans that had a ticket size of Rs 80,000 or more. Data suggests that as of March 2024, more than 12% of all microfinance borrowers had over 4 or more active loans. In dating parlance, this is a classic case of borrowers going polyamorous, minus the honesty and transparency. Not the best of situations, you'd agree! <h2>Will banks and NBFCs stand up to this stress?</h2>If their results for Q2FY25 are to be believed, NBFCs are not handling the pressure all that well. Or even slightly well. Only a few banks like Bank of Baroda (BoB), ICICI, and Indian Bank were up for the battle, even witnessing a decline in their loan delinquencies. Some others, like IndusInd Bank, saw their stock dip by a massive 16.2% over the last 5 days. Its slippages in the previous quarter burgeoned from Rs 15.3 billion in Q1FY25 to Rs 17.9 billion in Q2. As a result, the bank pushed a staggeringly high amount of money to create an NPA cushion for itself. While its management has highlighted its preference for secured lending, that was hardly reflected in its actions during the quarter, where growth in unsecured personal loans remained exceptionally high at over 7% on a QoQ basis. Turns out, only 44% of customers in IndusInd Banks’ microfinance loan portfolio were exclusive to it. The rest 47% were, you guessed it right-polyamorous! 27% had borrowed from another lender as well, apart from IndusInd Bank, while 20% were those who had outstanding loans with two other lenders, apart from IndusInd Bank. IndusInd Bank’s credit card segment did not miss the NPA bus and accounted for 7-8% of its GNPAs. Canara Bank’s total slippages during the previous quarter jumped to Rs 11.1 billion, up by 24.7% QoQ, and making up for 3.6% of its total loans. As for Bandhan Bank, its gross NPA for Q2FY25 inched up on a QoQ basis, up from 4.23% in Q1, to 4.68% in the second quarter. IDFC Bank’s heavy provisioning for its NPAs marred its profits significantly, causing its PAT (profit after tax) to dip by 73% on a YoY basis. Data from ICRA Analytics suggest that the AUM (asset under management) growth in microfinance loans and unsecured (personal and business) loans by the NBFCs will moderate to 10-12% and 19-21%, respectively, in FY2025 compared to 30% and 38%, in FY2024. Says A M Karthik, Senior Vice President &amp; Co-Group Head, Financial Sector Ratings, ICRA, “As bank funds constitute a larger share in the overall funding of NBFCs, a slower credit flow from banks to the NBFCs will compress their AUM growth. The NBFCs in unsecured and digital lending businesses shall face a higher squeeze in funding compared to others, and the unsecured lending space will continue to be a source of stress in the near term.” There has been uninhibited growth in <keyword id="6051027" type="General" weightage="20" keywordseo="Unsecured-loan" source="Orion">unsecured loan</keyword>s, apart from just the microfinance segment. For instance, Axis Bank’s gross slippages jumped by Rs 4,443 crore, largely thanks to its unsecured business. The same is the case with Yes Bank, which saw 35–40% of its retail slippages emerging from the unsecured loan portfolio. <keyword id="6376194" type="General" weightage="20" keywordseo="kotak-mahindra" source="Orion">Kotak Mahindra</keyword> Bank was also quick to follow Yes Bank’s suit, with around 35%-40% of its slippages coming from credit cards. <h2>How is the road ahead?</h2>While RBI has just cracked its whip and served a warning at the moment, experts at Morgan Stanley believe that more changes (read regulatory lashes) are underway. Moreover, with both festive and wedding seasons underway in our country, unsecured lending might pick up momentum, much to the disdain of the calibrated approach banks have been taking towards it so far. But if the situation doesn't improve, RBI will not waste any time in becoming the typical tyrannical <keyword id="19897820" type="General" weightage="20" keywordseo="bollywood" source="keywords">Bollywood</keyword> headmaster who runs his dominion with an iron fist. However, that's a story for another day. Do you have a topic in mind you'd want a simpler explanation for, or insights or personal experience to share on personal finance and more? Contact us at businessinsider@timesinternet.in.

Simply Put: Is the lending party over? The dangerous tango of Indian banks with microfinance and unsecured loans

The Retailers Association of India (RAI) on Friday called for <keyword id="20141385" type="General" weightage="20" keywordseo="lower-taxes" source="keywords">lower taxes</keyword> for individuals to generate demand and spur <keyword id="20018646" type="General" weightage="20" keywordseo="consumption" source="keywords">consumption</keyword> besides seeking low-cost finance, subsidies and benefits on land rates and necessities such as <keyword id="20028294" type="General" weightage="20" keywordseo="electricity" source="keywords">electricity</keyword> for retailers ahead of <keyword id="6360189" type="General" weightage="100" keywordseo="Union-Budget" source="Orion">Union Budget</keyword> FY25. Retailing in India accounts for about 10% of the country's GDP and the sector is second only to agriculture in terms of the number of people directly employed, RAI said in its pre-Budget memorandum highlighting areas that need attention in order to make the industry stronger. "To ensure the growth of the sector, the Union Budget for FY25 should focus on generating demand and spurring consumption by offering benefits or concessions in the form of lower taxes. It will boost the overall consumer sentiment and benefit the retail sector, it said adding, consumption equals to development and the "tax benefits and relief to individual <keyword id="59866" type="General" weightage="20" keywordseo="taxpayers" source="Orion">taxpayers</keyword> will increase the monthly disposable income and support consumption", the memorandum noted. Further, the budget should outline supportive policies, simplified regulations, skill development and simple goods and services tax (GST) norms to aid the development of the retail industry, RAI said. Asking for low-cost finance to retailers, the industry body said, "There is a need to provide lower interest rate to the retailers through the special announcement in the Budget to assure easier financing for the retail businesses." It also asked the government to consider the food and beverages retail sector as an essential service and said "subsidies and benefits should be given on land rates and other necessities such as electricity". RAI also said there is a need to expedite the formulation and implementation of '<keyword id="5649262" type="General" weightage="20" keywordseo="National-Retail-Policy" source="Orion">National Retail Policy</keyword>' to enable ease of doing business and that "such a step would provide a substantial boost to the retail sector". Stating that benefits to retail and wholesale trade MSMEs are restricted to priority sector lending only, RAI also recommended that retail and wholesale traders should be eligible for all benefits available to other MSMEs. Further, the retailers' body asked the Centre to encourage and incentivise states to adopt 'The Model Shops and Establishment (Regulation of Employment and Condition of Services) Act 2016 that enables states to choose to keep shops and other such establishments open 24X7 all through the year.

RAI's Budget wishlist: Lower taxes for individuals, benefits on land rates, electricity

Prime Minister Narendra Modi, on Wednesday, congratulated Reserve Bank of India's (RBI) Governor, Shaktikanta Das for bagging an A+ grade rating in the Global Finance Central Banker Report Cards 2024. Prime Minister in a post on social media "X" said, "Congratulations to RBI Governor Shri @DasShaktikanta for this feat, and that too for the second time. This is a recognition of his leadership at the RBI and his work towards ensuring <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> and stability." <keyword id="20850250" type="General" weightage="20" keywordseo="RBI-Governor-Das" source="keywords">RBI Governor Das</keyword> has been awarded the A+ grade rating for the second consecutive year. The Central Banker Report Cards, published annually by Global Finance since 1994, grade the central bank governors of nearly 100 key countries, territories, and districts, as well as the European Union, the Eastern Caribbean Central Bank, the Bank of Central African States and the Central Bank of West African States. Grades are based on an "A+" to "F" scale for success in areas such as <keyword id="21364628" type="General" weightage="20" keywordseo="inflation-control" source="keywords">inflation control</keyword>, economic growth goals, currency stability and <keyword id="22859834" type="General" weightage="20" keywordseo="interest-rate-management" source="keywords">interest rate management</keyword>. "A" represents an excellent performance, down through "F" for outright failure. "Central bankers have waged war against <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> over the past few years, wielding their primary weapon: higher interest rates. Now, countries around the world are witnessing the tangible results of these efforts, as inflation has dropped significantly," said Global Finance founder and editorial director Joseph Giarraputo. The RBI has been successful in controlling the larger macroeconomic situations in the country. The apex bank is actively working to push economic growth through its <keyword id="20900764" type="General" weightage="20" keywordseo="monetary-policies" source="keywords">monetary policies</keyword>. The RBI recently kept the the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> unchanged at 6.5 per cent after the deliberations of the Monetary Policy Commitee meeting earlier this month. The move reflects the central bank's cautious approach amid ongoing economic uncertainties. Announcing the monetary policy decisions, Das had said that the decision to keep the repo rate steady comes amidst persistent concerns about inflation, which remains above the RBI's target range. RBI Governor Das said that the inflation will moderate from July onwards as the monsoon has improved and global food prices have shown signs of easing in July. The Q1 <keyword id="19999655" type="General" weightage="20" keywordseo="Consumer-Price-Index" source="keywords">Consumer Price Index</keyword> (CPI) inflation for the current financial year (2024-25) is projected at 4.5 per cent. CPI inflation for the first quarter of the next financial year (Q1 2025-26) is projected at 4.4 per cent, as announced by the RBI Governor. India's retail inflation, after breaching 5 per cent in June, softened drastically in July. In line with the moderation in retail inflation, wholesale inflation in India too witnessed a sharp decline in July. The annual rate of inflation based on all India Wholesale Price Index (WPI) numbers is 2.04 per cent (provisional) for July 2024 (over July 2023).

PM Modi congratulates RBI Governor Das on A+ rating in Global Finance Report

<keyword id="1404739" type="General" weightage="50" keywordseo="housing-development-finance-corp-ltd" source="Orion">Housing Development Finance Corp Ltd</keyword> hiked its benchmark lending rate by 25 basis points, with effect from August 1, the company said in an exchange filing. The hike in rate by the mortgage lender came before the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword>'s (<keyword id="30067" type="General" weightage="50" keywordseo="rbi" source="Orion">RBI</keyword>) monetary policy meeting, which is to be held between August 3 and August 5. "<keyword id="45123" type="General" weightage="80" keywordseo="hdfc" source="Orion">HDFC</keyword> increases its <keyword id="648146" type="General" weightage="50" keywordseo="retail-prime-lending-rate" source="Orion">Retail Prime Lending Rate</keyword> (<keyword id="413108" type="General" weightage="100" keywordseo="rplr" source="Orion">RPLR</keyword>) on housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 25 basis points, with effect from August 1, 2022," the exchange filing said. The revised rates for new borrowers will range between 7.80 per cent and 8.30 per cent, against the existing range of 7.55 per cent to 8.05 per cent. For existing customers, the rates will rise by 25 bps. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/uneven-rains-could-have-a-detrimental-impact-on-crop-production-and-inflation/articleshow/93228276.cms">Uneven rains could have a detrimental impact on crop production and inflation: Nomura report</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/sustainability/news/centuries-old-indian-stepwells-may-serve-as-a-solution-to-water-conservation-during-the-scorching-heat/articleshow/93212987.cms?utm_source=social_sticky_non_amp&amp;utm_medium=social_sharing&amp;utm_campaign=Click_through_social_share">Centuries-old Indian stepwells may serve as a solution to water conservation during the scorching heat</a>

HDFC hikes its benchmark lending rate by 25 basis points

<ul class="summary-list"><li>Bitcoin peaked at $61,337 on Tuesday, the largest intraday gain since early August.</li><li>The rise comes amid anticipation that the Fed will deliver a half-point rate cut.</li></ul>The end-of-summer doldrums may be over for <a target="_blank" href="https://markets.businessinsider.com/currencies/btc-usd?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">bitcoin</a>.The token's price climbed as much as 6.4% to $61,337 on Tuesday, its biggest intraday jump since August 8. Investors are anticipating the Federal Reserve's long-awaited rate cut tomorrow, which will be announced at the end of the central bank's two-day policy meeting. Markets are still unsure how deep the cut will be, pricing in a <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">63% probability of a 50-basis-point move</a>.Regardless of the size of the cut, investors buying up bitcoin are anticipating the looser lending conditions will lead to more speculative behavior.One specific outcome Morgan Stanley recently identified as the <a target="_blank" href="https://markets.businessinsider.com/news/stocks/best-case-scenario-stock-market-outlook-fed-rate-cut-ms-2024-9?_gl=1*1l9q8vs*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTcyNjU4Nzg1OS42MTguMS4xNzI2NTkyNDA1LjU3LjAuMA..">best-case scenario for equities</a> would be a 50-basis-point cut accompanied by Fed messaging that the economy is on sure footing. The downside risk there is that investors will be spooked by a deep cut, because of what they think it signals about the economy.To that end, Tuesday's surprisingly strong retail data pushed back worries of a downturn, and may have contributed to bitcoin's rise."Retail sales beating expectations are being received well by the market, alleviating recession fears for now. We could be seeing a recovery of investors' appetite for risk-on assets like crypto, instigating more flows into Bitcoin spot ETFs," said Leena ElDeeb, a research analyst at 21Shares.Since bitcoin peaked at nearly $74,000 in March, the apex token has been unable to regain its momentum. <a target="_blank" href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-record-high-trump-harris-election-crypto-regulation-2024-9?_gl=1*zn7ct8*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTcyNjU4Nzg1OS42MTguMS4xNzI2NTkyOTA0LjYwLjAuMA..">Seasonal factors</a> weakened the spot bitcoin ETF inflows this summer while deteriorating macro conditions <a target="_blank" href="https://markets.businessinsider.com/news/stocks/safe-defensive-stocks-ai-investing-rally-nvidia-semiconductors-selloff-outlook-2024-9?_gl=1*7t9zvb*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTcyNjU4Nzg1OS42MTguMS4xNzI2NTkzMDE0LjYwLjAuMA..">drove investors toward safe, risk-off assets</a>.This may be changing. Crypto fund investments have risen by $436 million last week after two weeks of outflows, FxPro senior market analyst Alex Kuptsikevich wrote on Monday, citing CoinShares data."The surge in inflows at the end of the week was driven by a significant shift in market expectations for a potential 50bps Fed rate cut following comments from former New York Fed President Bill Dudley," he said.

Bitcoin is surging on hopes rate cuts will drive a speculative rush

<ul class="summary-list"><li>Wall Street's biggest banks face a less profitable lending environment as interest rates fall.</li><li>Bank bosses shrugged off those concerns this week and pointed to several benefits of lower rates.</li></ul>Lending threatens to become far less lucrative for Wall Street's biggest banks as interest rates fall. But executives don't seem to be worried — and even spy some benefits from cheaper borrowing.The Federal Reserve <a target="_blank" class="" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">cut its benchmark rate</a> by 50 basis points to between 4.75% and 5% in late September. The central bank had hiked that rate from nearly zero to as high as 5.25% between March 2022 and July 2023 in response to soaring inflation.The Fed is widely expected to keep lowering rates to stimulate economic growth and <a target="_blank" class="" href="https://www.businessinsider.com/stock-market-crash-recession-warning-signs-job-market-indicators-unemployment-2024-10">stave off a recession</a> — while being careful not to rekindle inflation or overheat the job market.<a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/banking/bank-of-america-review">Bank of America</a> CFO Alistair Borthwick said on an earnings call this week that even if rates drop below 3%, lenders have historically done well in that environment. He emphasized that banks have many levers to pull that can fuel strong performance."We control our client experience," he said, according to an Alphasense transcript. "We control the <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/warren-buffett-advised-american-express-ceo-protect-brand-name-2020-5">level of service</a>. We control the relationship orientation, we control the pricing. We control our expense. So, there are an awful lot of things that we control through any cycle."Banks also offer a wide range of services, some of which do better when rates fall, even as others fare worse.Citigroup CEO <a target="_blank" class="" href="https://www.businessinsider.com/citi-jane-fraser-regulators-occ-frb-consent-orders-asset-cap-2024-10">Jane Fraser</a> told analysts this week that fee-based revenues at her bank rose by double digits last quarter despite rates declining, "reflecting the growing diversity of our earnings mix."Lower payment rates fueled interest-earning balances last quarter, and the bank grew its retail mortgage portfolio and overall loan book, Fraser said.<h2 id="f6b149ca-d5eb-4cbd-81c8-b0e1a7d0bec3">Consumer revival</h2>Falling rates promise to reduce interest payments on mortgages, car loans, credit cards, and other debts. But that could leave consumers with more disposable income, which could benefit banks.Citigroup CFO Mark Mason said on the bank's earnings call that inflation cooling and rates dropping <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/big-short-michael-burry-jpmorgan-consumer-inflation-rates-banking-crisis-2023-4">helps consumers</a> and the overall economy, which can reduce loan delinquencies and net credit losses for banks as more people can repay their debts. He said the lender is already seeing more stability with delinquencies improving.Wells Fargo CEO Charles Scharf said on his bank's earnings call that waning inflation and sliding rates should be especially helpful to lower-income people. However, he reported weaker demand for commercial loans because of economic uncertainty and customers holding off on borrowing until rates fall.Wells Fargo has reduced rates on some deposits and raised them on others, striking a balance between protecting its profits and losing customers.Morgan Stanley CFO Sharon Leshaya told analysts this week that her bank's net interest income would likely decrease year-over-year this quarter. Similar to Citi's Fraser, she highlighted loan growth last quarter, saying "this is just the beginning." She also reported a <a target="_blank" class="" href="https://www.businessinsider.com/real-estate-mortgage-rates-outlook-prediction-top-cities-homebuyers-owners-2024-10">steady increase in mortgages</a>, and forecasted declining rates would fuel a jump in refinancing activity.On JPMorgan's latest earnings call, CFO Jeremy Barnum reported a "pick up in mortgage applications and a tiny bit of <a target="_blank" class="" href="https://www.businessinsider.com/mortgage-rates-30-year-refinance-applications-real-estate-housing-market-2024-8">pick up in refi</a>," as well as "some hints of more activity" in the banking giant's multifamily lending business.Barnum said the lender was yet to see a material acceleration in loan growth or a surge in investment banking deals. But he said the Fed's jumbo rate cut might have sparked more activity in debt capital markets recently.<h2 id="d11f3f95-7494-42dd-8d0f-a7a52424322a">Stock surge</h2><a target="_blank" class="" href="https://www.businessinsider.com/goldman-sachs-3q-results-dealmaking-trading-resurgence-david-solomon-2024-10">Goldman Sachs</a> was the exception to the rule this quarter, with little discussion from executives on its earnings call about how falling interest rates are affecting the bank. CEO David Solomon said the Fed's first rate cut has raised hopes of avoiding a US recession, which could translate into more economic activity. He added that Goldman's clients were "highly focused on the trajectory of rates" around the world, among other issues.Bank stocks have fared well since the Fed cut, with Citi and BoA both up just over 8% in the past month, Goldman rising 9%, Wells Fargo jumping 17% and Morgan Stanley soaring almost 20%.

Bank bosses aren't worried about lower interest rates — and even see some upside

<ul class="summary-list"><li>The Federal Reserve cut interest rates by 50 basis points on Wednesday.</li><li>But the lag in monetary policy means it'll take time to feel the relief.</li></ul>The nation's central bank has <a target="_blank" class="" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">finally cut interest rates</a> for the first time in over four years. But Americans might not feel that relief just yet. On Wednesday, the Federal Open Market Committee announced an interest-rate cut of 50 basis points, concluding years of the Federal Reserve's aggressive inflation-fighting as the US began recovering from the pandemic. It followed months of some experts and Democratic lawmakers <a target="_blank" href="https://www.businessinsider.com/interest-rate-cuts-timeline-federal-reserve-inflation-powell-economists-forecast-2024-7">calling for the Fed to cut rates to give Americans relief</a>, and their calls were finally answered.While the cuts signal good news for Americans — it reflects the Fed's confidence that inflation is finally returning to normal — it'll take time for consumers to actually feel the effects of lower rates. That's because there's a lag in monetary policy, meaning that it could take months for a rate cut this month to materialize for consumers. Further, rates for the kinds of loans most Americans hold are only indirectly affected by the Fed's moves."The universe of interest rates is one where the Federal Reserve's impacts vary, but the central bank helps set the tone even where there isn't a direct correlation," Mark Hamrick, a senior economic analyst for Bankrate, told Business Insider.Erica Groshen, senior economics advisor at Cornell University and the former commissioner of the Bureau of Labor Statistics, said in a statement to Business Insider that lower rates will have at least three types of effects: They'll lower the cost of consumer borrowing, similarly make corporate borrowing cheaper, and "people who live on interest on their savings will lose some of their income, and so may reduce their spending."Those effects might not be felt right away.One big area where consumers might experience the lag is <a target="_blank" href="https://www.businessinsider.com/fed-rate-cut-impact-credit-card-loan-rates-debt-consolidation-2024-9">credit cards</a>. Credit card interest rates are at historic highs right now — the Consumer Financial Protection Bureau found in a recent report that the average annual percentage rate on credit cards surged to 22.8% in 2023, nearly doubling over the past decade. Michele Raneri, vice president and head of US research and consulting at TransUnion, told BI that "it'll take a while for consumers to realize the benefit" of the cuts."A consumer who is carrying a balance is going to have to pay off the balance that they already have at that higher rate before the lower rate applies to their balance," Raneri said, meaning consumers with credit-card debt will continue to see high rates despite the Fed's cuts.Still, Hamrick said within a day of the Fed's rate cuts, banks will likely adjust their prime lending rates, which will be noticed in credit-card rates "immediately."The Fed rate cuts indirectly affect <a target="_blank" href="https://www.businessinsider.com/how-fed-rate-cut-could-impact-mortgage-rates-homebuyers-2024-9">mortgages</a>, which are generally based on other interest rates that are loosely tied to the Fed funds rate. Homeowners who already have a fixed-rate loan, which make up an overwhelming majority of the US mortgage market, won't feel the effect of the Fed's decision unless they refinance at a lower rate or buy a new home. The situation is similar for people who have a fixed-rate car loan.And when it comes to businesses, rate cuts will have a positive impact on their operations, making it cheaper to take out loans. However, they won't be immune from the lag — it'll likely take a number of rate cuts from the Fed before businesses are able to significantly speed up their hiring and investing, as a single cut won't be enough to make those changes to their business plans.Savings rates will also be affected by the Fed's rate cut decision."Savers will continue to be rewarded for searching for the best rates, even as yields slip from the peak," Hamrick said, adding a "modest decline in yields is relatively inconsequential compared to the decision to save itself."Elizabeth Renter, senior economist at NerdWallet, said in a statement that people will see "impacts on the interest rates that banks pay on savings accounts and certificates of deposit." However, she added "these reductions work against the consumer.""Rates on savings accounts and CDs have been higher than typical in our recent high rate environment," Renter said. "As the Fed cuts initially and moving forward, we'll see banks reduce these rates too."It's unclear at this point how many more times and how low the Fed will cut rates as the year comes to a close. However, it will take time for Americans to see borrowing costs get cheaper, and it could be beneficial to them to account for that lag before making big financial decisions."I would urge people to do the math rather than to just sort of take a signal like it's a traffic light and now's the time to go," Hamrick said.Are you planning to make any big purchases now that the Fed has cut interest rates? How does this impact your financial planning? Share your story with these reporters at <a target="_blank" href="mailto:asheffey@businessinsider.com">asheffey@businessinsider.com</a> and <a target="_blank" href="mailto:mhoff@businessinsider.com">mhoff@businessinsider.com</a>.

It'll be a while before you feel today's interest-rate cuts

<ul class="summary-list"><li>Amazon's Prime Day runs July 16 and 17 this year.</li><li>But some <a target="_blank" class="" href="https://www.businessinsider.com/amazon-flex-driver">Amazon Flex</a> workers are already busy with deliveries.</li></ul>Amazon's massive <a target="_blank" class="" href="https://www.businessinsider.com/guides/tech/what-is-amazon-prime">Prime Day</a> sale doesn't start until July 16.But for one Amazon Flex delivery worker in Alabama, work started picking up this past week.The worker said she picked up six "blocks" — shifts between three and six hours long. That's more than the worker has usually been able to claim in the past."I was basically booked up for an entire week, which really doesn't happen," the worker said."It seems they are making sure to get all of the regular stuff out in anticipation" of Prime Day, she added.The Flex worker, who made deliveries for Amazon during Prime Day in 2023, asked not to be identified by name, but Business Insider has verified her identity and work for Amazon.For many Amazon delivery workers, Prime Day has become one of the busiest times of the year. The 2024 version of the event, which will take place on July 16 and 17, promises to be no different: <a target="_blank" class="" href="https://www.businessinsider.com/guides/deals/early-amazon-prime-day-deals">Amazon has already spent weeks promoting some discounts</a> and deals. It's promising new deals for shoppers every five minutes during the event itself.This year, Prime Day will also occur the same week as Alabama's tax-free weekend, a three-day period when shoppers can stock up on supplies for the new school year without paying sales tax.Amazon employs a few different kinds of delivery workers. Those who work through the company's Flex program are independent contractors using their own cars and are paid by the block. Making certain types of deliveries, such as grocery orders from Whole Foods, comes with the potential to earn tips.The Flex worker BI spoke with says she's seen more new faces at the Amazon facilities she frequents — a sign, she said, that Amazon is staffing up in advance of the banner shopping week."Prime Day, and then right around October, those are the two biggest times when they hire people because that's when everybody's shopping," the worker told BI, referencing the fall increase in hiring ahead of the holiday shopping season.One challenge for Flex workers is delivering all those packages within the time allotted for the block, the worker said.The worker recalled delivering about 30 packages per three-and-a-half-hour block earlier this year. Lately, though, the worker has noticed that number reaching closer to 40, especially during evening delivery shifts.And if you don't do it, "they'll just say you're unreliable, and you're gone," the worker said.Getting shifts with the best pay also requires a strategy, she said.During a normal week in her area, a three-and-a-half hour block of delivering packages pays $63, the driver told Business Insider. That rate can go above $80 if drivers wait until hours — or even minutes — before a shift, she said.But in the run-up to Prime Day, those higher offers come up sooner — even a full day before the shift, she said.Workers are also competing with the influx of new drivers around the event. Speaking to BI on the Thursday before Prime Day, the Flex driver said she still hadn't seen any blocks for next week, but she's ready to grab whatever shifts she can."Everything just hits bigger and quicker" around the shopping extravaganza, the driver told BI."The Amazon Flex program gives individuals the opportunity to set their own schedule and be their own boss, while earning competitive pay," Amazon spokesperson Branden Baribeau told BI."Amazon Flex delivery partners are able to work when they want – including on and around Prime Day – with the vast majority finishing their delivery blocks early," Baribeau said."When something like a delivery partner repeatedly not showing up for a scheduled block or not following our Terms of Service occurs, our team manually reviews each case to determine if eligibility to deliver with the Amazon Flex program should continue," Baribeau said in response to a question about when Amazon considers deactivating Flex workers.Baribeau said that Flex workers earn $26 per hour on average.Do you work for Amazon Flex, Whole Foods, Amazon Fresh, or another part of Amazon's retail operations and have a story idea to share? Reach out to this reporter at abitter@businessinsider.com

An Amazon Flex worker explains the biggest challenges of Prime Day deliveries

<ul class="summary-list"><li><a target="_blank" href="https://www.businessinsider.com/amazon-prime-membership-bounces-back-us-2024-1">Amazon Prime</a> had 180 million members in March, according to new data.</li><li>That's 75% of all US shoppers, Bloomberg Businessweek reported.</li></ul>Now more than ever, you're more likely than not to be an <a target="_blank" href="https://www.businessinsider.com/guides/tech/what-is-amazon-prime">Amazon Prime</a> member. About 180 million people had a <keyword id="2130307" type="General" weightage="20" keywordseo="prime-membership" source="Orion">Prime membership</keyword> as of March, <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-04-16/amazon-prime-memberships-in-us-gain-8-to-new-high-after-lull">Bloomberg reported</a> on Tuesday, citing data from Consumer Intelligence Research Partners. That represents an 8% increase from 2023, according to the data. It also brings the share of US consumers who have Prime to 75%, per the report. <keyword id="18635" type="General" weightage="20" keywordseo="amazon" source="Orion">Amazon</keyword> did not immediately respond to a request for comment from Business Insider. Online shopping, including from Amazon, took off during the pandemic. The new numbers suggest that Prime still has growth potential, albeit at a less rapid rate. Prime fees, which cost $15 a month or $140 annually, are a key source of revenue for Amazon. Analysts surveyed by Bloomberg expect the company's subscription revenue for the first quarter will jump 12% to $10.8 billion; data are due April 30. Other retailers are trying to popularize their own membership services, which offer perks like free shipping on online orders and access to streaming services. Last month, <a target="_blank" href="https://www.businessinsider.com/target-circle-360-membership-price-unlimited-same-day-delivery-2024-3">Target said it would offer Circle 360</a>, a membership that provides unlimited same-day delivery on orders from its stores, for $49 a year. Walmart, meanwhile, has been expanding its <a target="_blank" href="https://www.businessinsider.com/walmart-pulls-promo-after-shoppers-buy-walmart-memberships-by-mistake-2023-7">Walmart+ subscription program</a> for years. Some shoppers have still managed to <a target="_blank" href="https://www.businessinsider.com/hat-learned-quit-buying-amazon-stores-community-2024-2">avoid signing up for Prime</a>. But in a sign of how engrained Amazon has become in the e-commerce world, even items bought on other websites, such as eBay, end up being shipped by Amazon. Do you work for Amazon Fresh, Whole Foods, or another part of Amazon's retail business and have a story idea to share? Reach out to this reporter at abitter@businessinsider.com

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