CRR HIKE
Will FD interest rates touch 10%? All eyes on RBI MPC on December 8, 2023
A slew of Small Finance Banks (SFBs) already offer 9.2% to 9.5% interest on FDs to senior citizens. Unity Small Finance Bank offers an interest rate of 9.5% to senior citizens on FDs maturing in 1001 days. Will interest rates on FDs touch 10% in the near future? Will the interest rates on fixed deposits (FDs) go up further? The decision to hike FD interest rates will depend on various factors. Find out how interest rates of FDs may move in the future and how you should invest.
Whether RBI cuts rate in December or February depends on where the Fed is: Indranil Sengupta
Indranil Sengupta of CLSA India believes that the Federal Reserve (Fed) is done hiking rates, and if they hike once more, the RBI will also hike rates. However, high real policy rates have historically led to slowing US growth or even recessions. Sengupta expects the RBI to cut rates in December if the Fed is done, or in February if the Fed hikes. He also dismisses concerns about inflation, attributing it to uneven rains.
RBI meet starts: Repo rate to be left unchanged, but cautious tone likely amid inflation risks
While the repo rate and the stance of “withdrawal of accommodation” may be left unchanged, the tone of the central bank is likely to be slightly hawkish, particularly on the inflation front, in the backdrop of the current domestic and global environment.
FD rates hike: Will banks increase fixed deposit interest rates now due to higher loan demand?
FD rates hike: The bank credit rose 9.1% to Rs 124.5 lakh crore in April-August 2023, while bank deposits surged by 6.6% to Rs 149.2 lakh crore in the period. As a result, will banks hike the interest rates of fixed deposits (FDs) in the short-term or long run? Let's find out what experts say
India's banking system liquidity slips into deficit first time in FY24
Banking system liquidity stood at a deficit of Rs 236 billion ($2.84 billion) as of Aug. 21, according to RBI data. Liquidity surplus had hit a 13-month high of Rs 2.8 trillion at the start of the month, but has been dropping since then. Overnight rates have stayed closer to RBI's marginal standing facility (MSF) rates since the start of this fortnight, with most banks remaining on borrowing side.
RBI expected to hold policy rate again at next review meeting: Crisil
The monetary policy committee of the Reserve Bank of India is expected to again hold the policy rate in the next meeting, as the central bank awaits a clearer picture on the inflation trajectory, said Crisil in a report. A 25 basis point rate cut in early 2024 is a conditional possibility for now, it said.
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RBI signals intent to soon return funds sucked via incremental CRR hike
The Reserve Bank of India (RBI) has stated that it is likely to return the impounded funds related to the temporary increase in cash reserve ratio ahead of advance tax outflows from the banking system and well before the pick-up in the demand for bank credit. The RBI had asked banks to maintain an additional cash reserve ratio (CRR) of 10% on an increase in deposits between May 19 and July 28 in the August 11th monetary policy decision.
RBI could extend incremental CRR to rein in liquidity
The RBI may not increase the repo rate as it ascertains the durability of high food prices while seeing the impact of previous rate hikes work their way through the economy, which faces threats from a weak external environment. The central bank can, however, bolster transmission of its policy actions and prevent borrowing costs from turning cheaper by keeping a tight leash on banking system liquidity.
RBI asks banks to set aside incremental CRR
The Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday directed banks to set aside a larger part of incremental deposits under cash reserve ratio (CRR) to tighten liquidity in the near term. The remark from Das came while he was announcing key decisions of the Monetary Policy Committee (MPC) meeting held from August 8-10.
RBI may tighten cash conditions, but CRR hike unlikely- Traders
The Reserve Bank of India may look to tighten domestic rupee liquidity to quell inflationary pressures but will refrain from permanent cash withdrawal, several traders and analysts said ahead of Thursday's monetary policy review. The central bank is expected to hold policy rates steady but could turn more hawkish given that inflation in July is likely to have risen above its comfort band.
Monetary tightening behind us; liquidity to remain key focus for RBI
The Reserve Bank of India (RBI) is expected to maintain its pause on monetary tightening through FY24, despite markets anticipating rate cuts. Soft inflation, real policy rates above 1%, easing external balance pressures and global monetary tightening at its peak have signaled a dovish turn by the RBI MPC, but concerns over monsoon and oil prices and resilient growth could cause further pause. Liquidity conditions are expected to ease in 2QFY24 with government spending trends continuing, but tighten yet again in 2HFY24 with seasonally higher currency in circulation leakage. The focus is on how the RBI will manage liquidity conditions and policy stance.
RBI not alarmed by spikes in call rate
"If there is persistent market dysfunction and if market participants face serious stress in funding, maybe the RBI will come out with a 3-day or a shorter-term repo. They will be available in that situation," a source said.
RBI Policy Preview: Will MPC deliver the final rate hike on Thursday?
The recent global developments will weigh heavily during the policy decision making by the MPC. The G3 central banks have delivered as per the previous forward guidance
Banks want funds in dormant accounts taken as CRR
Banks have reached out to the Reserve Bank of India (RBI) with a suggestion to count funds in unclaimed deposits and inoperative or dormant accounts towards the cash reserve ratio, or CRR, people familiar with the matter told ET.
Market valuation could decline further in near term but long-term growth story intact
RBI’s hawkish policy is focused largely on heightened inflationary concerns. The 50 bps rate hike in the policy repo rate is in line with the expectations, and this has led to softening of bond yields post the policy announcement as the market was already pricing in the rate hike. The markets were relieved, as there was no CRR hike.
Analysts see RBI taking policy rates well above pre-pandemic levels by March
Earlier in the day, the RBI-led MPC delivered a 50 bps hike in the key policy rates to 4.90 per cent but left the cash reserve ratio unchanged and sounded more concerned about inflation management, as it has withdrawn the accommodative stance.
Bonds rally despite 50 bps RBI rate hike! Here’s why
Traders who had bet on bond prices declining after the RBI’s policy statement rushed to square off those positions in the secondary market, thereby pushing up prices further.
Banks don't want liquidity to drop, urge RBI not to raise CRR further
Indian Banks Association (IBA) made the requests on behalf of the lenders to the central bank last week after excess liquidity dropped to nearly ₹3.5 lakh crore - about half the amount maintained by RBI through the pandemic.
SBI revises up FY23 economic growth forecast to 7.5%
Similarly, the sector-wise data for April indicates that credit offtake has happened in almost all sectors led by personal loans registering 14.7 per cent demand spike in April and contributing around 90 per cent of the incremental credit in the month, primarily driven by housing, auto and other personal loans as customers, expecting interest rate hikes, have been front-loading their purchases.
US Fed's interest rate hike has made the dollar appreciate against every currency including the rupee
RBI allows to remit up to $250,000 per person in a financial year. This remittance is towards all foreign currency expenses, including Investments outside India.
Inflation increase due to war impact; RBI may hike rates by 75 bps by August: SBI Economists
The economists said they did a study of the Russian invasion's impact on inflation, which revealed that 59 per cent of the jump in prices is due to geopolitical events.
RBI to hike rates again in June as inflation pressures mount
With the latest headline retail inflation coming in at an 8-year high and above the tolerance limit for the fourth consecutive month, analysts expect the Reserve Bank of India (RBI) to hike rates yet again.
By 2023, SBI will be nearer 15% ROE, rate hikes to boost NIMs: Dinesh Kumar Khara
“Inflation is a function of multiple variables and a major component is fuel-led inflation and also the edible oil-led inflation both of which are essentially on account of the imports which we are having. Going forward, how these two very important factors behave will probably give the trajectory for inflation.”
Lenders to get 10-15 bps margin gains from rate hike: Report
The 364-day T-bills have moved up 120 bps and 10-year G-sec by 140 bps since May 2020, when the repo rate was cut to a record 4 per cent, which led to an expectation of a faster and sharper rise in interest rates in the system but the central bank stayed the course to support the fragile economy battered by the pandemic.
Some impact of rate hike will be on MSME sector: SBI MD
“Typically there will be some impact on MSMEs but overall, the rates for MSMEs are quite low and when they are supported by similar schemes, I do not think it is going to be a make or break situation for them because for them the more important thing is liquidity and timely availability of credit. So as long as we focus on making credit available to them. they should be able to absorb this cost.”
Rate actions show RBI's flexibility, will help markets: SBI chief Dinesh Khara
Earlier in the day, RBI Governor Shaktikanta Das delivered a video message in which he spoke about the six-member rate-setting panel having met off-schedule, and announced a 0.40 per cent hike in the repo rate and 0.50 per cent increase in the cash reserve ratio.
How will RBI rate hike impact your mutual fund investments?
The RBI finally hiked the key short-term policy rate, and Cash Reserve Ratio to contain inflation. These measures will have an impact on your investments.
RBI CRR hikes to increase overnight rates
CRR has been hiked to 4.5% from 4%, now taking it above the pre pandemic level when it was reduced to 3% as part of the central’s banks efforts to support the economy due to the pandemic and subsequently raised to 3.5% in 2021. In his statement governor Shaktikanta Das said the hike in CRR was to ensure, liquidity conditions are “modulated in line with the policy action.”
RBI hikes CRR by 50 basis points to 4.5%, to remove Rs 87,000 crore of liquidity
The RBI today announced a rate hike to 4.4 per cent, up by 40 basis points in a surprise move that rippled through the equity and bond markets.
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