RBI MONEY POLICY
Menace of 'money mules' and how not to become one
Mule accounts are bank accounts that are used to launder proceeds of crime by fraudsters. In an age when there are strict laws on holding or using large amounts of cash, transactions in the banking system cannot be avoided. At the same time, criminals cannot use bank accounts because KYC norms will enable authorities to link the money to the activity through which they receive it.
RBI holds rates amid food inflation fears
The Reserve Bank of India (RBI) kept policy interest rates unchanged for the eighth consecutive meeting due to concerns about rising food prices. The central bank raised its economic growth forecast for FY25 to 7.2% from 7%, driven by state investments and broad-based consumption. Despite inflation worries, the repo rate remains at 6.5%. A divide in the Monetary Policy Committee emerged, with two members favoring a rate cut. Equity indices surged, but bond yields rose slightly. Governor Das emphasized India's independent monetary policy stance.
Flexible approach in managing liquidity to help money market rates
RBI Governor Shaktikanta Das announced the central bank's commitment to maintaining money market rates and borrowing costs through flexible liquidity management. The RBI will use various operations to manage liquidity, responding to foreign investment flows impacting Indian bond markets. Analysts predict significant foreign flows following inclusion in JPMorgan's bond index, potentially affecting rupee liquidity. Das highlighted the RBI's ability to handle liquidity impact and swiftly respond to banking system liquidity fluctuations.
Expect repo rate cut only in October RBI policy meeting: SBI Research
The report, authored by Soumya Kanti Ghosh, SBI's Group Chief Economic Adviser, expects first repo rate cut in October meeting. The repo rate is the rate of interest at which the RBI lends to other banks.
FASTags, NCMC payments to become easier: You don't have to add money manually for each recharge
New recurring payments rule: The Reserve Bank of India (RBI) announced including recurring payments for Fastag, National Common Mobility Card (NCMC), etc. with auto-replenishment facility under the e-mandate framework.
High FD interest rates may not last long despite RBI status quo; is this the last window to book fixed deposits at higher rates?
FD Interest Rates: RBI in its MPC meeting on June 7 kept the repo rate unchanged at 6.5%. This marks the eighth consecutive MPC with status quo, benefiting fixed deposit investors with high rates. However, going forward the interest rate cycle to reverse. The potential for a rate cut later in the year is anticipated.
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Home loan borrowers may have to wait longer for lower EMIs but a rate cut likely this year; how to make the most of it
Home Loan Interest Rates: The Reserve Bank of India (RBI) in its recent Monetary Policy Committee meeting decided to maintain the repo rate at 6.5%, prolonging the wait for home loan borrowers seeking relief from high interest rates and increased EMIs. Despite the current pause in repo rate the possibility of a rate reduction this year is still there.
RBI maintains interest rates amid growing calls for easier money policy
The Reserve Bank of India (RBI) kept interest rates unchanged in its eighth consecutive meeting, with some members leaning towards easing monetary policy due to concerns about rising food prices. The central bank raised its FY25 growth forecast by 20 basis points to 7.2%, leading to a surge in equity indices. Inflation remains a concern due to global commodity price increases and potential food price spikes.
Nilesh Shah on factors that are driving the surge in FMCG stocks
When you want to play a game of bowling, you need guardrails and it does stop your ball going into other lanes. Regulatory supervision is the guardrail. If you want to play the game, guardrails are necessary. In my opinion, RBI is formulating rules, regulations, keeping in mind what is probably happening at the lowest common denominator.
Will RBI start cutting interest rates from October? Dr Samiran Chakraborty answers
In Citi's house view, we think that the Fed rate cut will start early, so we have put our first RBI rate cut in October, to some extent also factoring that in that if Fed moves earlier, then RBI gets the scope to move as well.
FIIs follow 'sell in May and go away' mantra ahead of election results with Rs 25,600 crore sell-off
In May, foreign institutional investors (FIIs) sold Indian stocks worth Rs 25,600 crore, aligning with the 'Sell in May and go away' adage. Increased net shorts in index futures, outperformance of Chinese stocks, and concerns about high valuations contributed to the sell-off.
Frauds by bank employees: Take these steps to ensure branch manager or any other employee does not run away with your money
Fraud by bank employees: Many reports of bank employees defrauding customers of the bank. These are the cases where the bank and its customers both are the victims of fraud by the employee(s). In a recent judgement by the SC, it was said that banks would be held liable for criminal misconduct by its employees.
Monsoon holds key for RBI's future monetary policy actions
As India faces summer heatwaves, chances of the Reserve Bank of India (RBI) reducing interest rates dwindle. The Bank of Baroda report links severe heat to potential food price impacts, underscoring the monsoon's critical role. Despite forecasts of above-normal monsoon, inflation challenges persist, delaying RBI's policy adjustments. Heatwaves disrupt travel, impacting sectors differently.
Where are interest rates headed?
However, the near consensus in the market is that India’s superior growth and earnings potential for many years to come justifies higher valuations.
Managing the trilemma of inflation, growth and exchange rate
For many other Asian economies, domestic economic conditions warrant a cut in interest rates, but fears of currency depreciation could hold their central banks back. If private investment and consumption are the next growth engines, will lower interest rates help?
Where did the funds come from? Banks ask Indians moving money abroad
Under the Liberalised Remittance Scheme (LRS), resident individuals are permitted to transfer up to $250,000 a year abroad to invest in properties and securities, maintenance of relatives, among other specified purposes. Some of the tax professionals and bankers ET spoke to said authorised dealer (AD) banks are undertaking greater scrutiny before clearing LRS remittances.
Karuvannur-like 'scams' at 12 Kerala co-op banks, ED tells revenue department
Sharing its investigation report with the Department of Revenue, the ED has shared a list of 12 service co-operative banks where "similar irregularities have been observed" as in the case of Karuvannur Service Co-operative bank where ED already claims to have discovered "five undisclosed bank accounts" of CPM leaders, as first reported by ET on April 1.
RBI to revisit LCR framework in bid to shield banks from run
The central bank will issue a draft circular in this regard for comments of all stakeholders. Under the liquidity coverage ratio (LCR) introduced post the global financial crisis, banks are currently required to maintain a stock of high quality liquid assets (HQLA) to cover the expected net cash outflows in the next 30 calendar days.
RBI Policy: What pause means to mutual fund investors
Higher interest rates are considered bad for mutual fund investors, especially debt fund investors. Bond yields and prices have an inverse relationship, which means when the interest rate or bond yields go up, the net asset value of debt funds goes down
SBI MD on RBI policy, LCR framework & more
AK Tewari discusses the importance of adapting LCR monitoring to digital times to prevent rapid bank runs due to the instant withdrawal capability, emphasizing the critical role of deposit gathering in the banking sector amid ongoing transformations. Tiwari also says: "For all banks, especially the deposit gathering and focus will be the key thing for the next several quarters."
RBI leaves repo rate unchanged; retains “withdrawal of accommodation” stance
RBI maintains 6.50% repo rate after 3-day meeting, focusing on withdrawing accommodation. Supported by 5 of 6 MPC members. Minimal market impact on Sensex, Nifty 50.
RBI Policy Rate: No tango with repo, yet RBI moves ease rates
The Reserve Bank of India (RBI) has indirectly eased policy rates through consistent liquidity injections, leading to a decline in the weighted average call rate (WACR) towards the benchmark repo rate. This trend reflects increased confidence in liquidity management strategies, supported by government spending and proactive RBI operations. Analysts suggest a shift towards containing inflation while maintaining stable borrowing costs.
Paytm moves PoS terminals to RBL Bank; CCI orders probe on Google
Paytm’s point of sale (PoS) terminals for processing card payments are being moved to RBL Bank. This and more in today’s ETtech Top 5.
ET Explainer: The RBI's liquidity stance and its effect
The Reserve Bank of India's liquidity stance is not convincing experts. It follows a corridor liquidity management system with repo rate as the ceiling and reverse repo rate as the floor. Factors causing tight liquidity include withdrawal of accommodative stance, credit growth surpassing deposit growth, fund constraints, slower government spending, and Ukraine war impacting forex reserves.
RBI order on credit card networks; Google billing row unnerves gaming apps
The central bank’s latest diktat barring exclusive deals between banks and card companies could disrupt their mutually beneficial partnerships. More on this in today’s ETtech Morning Dispatch.
Disconnect between RBI rate corridor and call rate represents 'serious friction,' says MPC’s Varma
Jayanth Varma, external member of the Monetary Policy Committee, discusses the challenges in transmitting policy rate changes due to money market rates breaching the Reserve Bank of India's interest rate corridor. Liquidity management and the impact of benchmark policy rate on market rates need to be taken into consideration, he explains.
RBI's nimble and flexible in managing liquidity: Guv
Since April 2022, the RBI has adopted a stance of focusing on withdrawal of accommodation to tackle inflation. Liquidity in the banking system has been at a deficit over the past six months, with the weighted average call rate (WACR) broadly remaining 20-25 basis points above the repo rate from August to January. The WACR is the operating target of the RBI's monetary policy.
RBI steps up auctions to drain liquidity
Over the past four days, the RBI has carried out six rounds of short-term variable rate reverse repo (VRR) auctions that help mop up surplus funds from the banking system.
Effective rates now largely higher than repo rate
An analysis of the weighted average call rate (WACR) shows that the key overnight market rate has been much higher than the repo rate was during the phase of rate hikes and stance of calibrated tightening that the central bank had adopted in 2018.
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