RBI Monetary Policy Committee LIVE: In line with expectations, Reserve Bank of India (RBI) Governor Shaktikanta Das announced that the RBI's central bank’s Monetary Policy Committee (MPC) has decided to maintain status quo and keep its stance accomodative. This is the sixth consecutive time rates have been unchanged. In a virutual address on June 4, Das said this comes amid economic impact due to the second wave of coronavirus cases in India, expectation of a normal monsoon, ability of businesses to adapt to pandemic working and need to maintain adequate liquidity in the economy. Most experts had said they expect the RBI to leave key rates such as the repo rate and reverse repo rate unchanged with a view to maintain liquidity in the economy amid the COVID-19 crisis and lockdowns. The was due to the RBI’s repeated assurances that it will “ensure adequate rupee liquidity in the financial system to help the economy's productive sectors and the government's massive borrowing program”. The statement was also reiterated by Das in today's speech.
Here are the key announcements:
>>MPC keeps repo rate unchanged at 4%: The Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC), which sets interest rates in the country, on June 4 kept key policy rates unchanged citing persisting uncertainties on the economic front due to the COVID-19 pandemic. The MPC was keeping the repo rate at 4 percent and reverse repo rate at 3.35 percent, RBI Governor Shaktikanta Das announced. The marginal standing facility (MSF) rate and the bank rate remained unchanged at 4.25 percent.
>> Real GDP growth projected at 9.5% in 2021-2022: RBI Governor Shaktikanta Das announced that RBI expects real GDP growth at 9.5 percent in 2021-2022 consisting of 18.5 percent in first quarter, 7.9 percent in the second quarter, 7.2 percent in the third quarter and 6.6 percent in the forth quarter of 2021. The RBI had earlier forecasted 10.5 percent GDP growth for 2021-2022. For Q1, RBI had expected 26.2 percent, much higher than the now revised figure. RBI had also lower forecast for Q2 at 7.9 vs 8.3 percent forecasted earlier. The central bank had pegged Q3 growth at 5.4 percent and Q4 at 6.2 percent, both lower than the now revised growth figure.
>> CPI inflation projection rate at 5.1% for FY22: Governor Das announced a projection for Consumer Price Index (CPI) inflation at 5.1 percent for FY 2021-22. Das pegged the quarter wise inflation projections for FY22 at 5.2 percent in Q1, 5.4 percent in Q2, 4.7 percent in Q3 and 5.3 percent in Q4, with risks broadly balanced. Normal monsoon and business resilience can provide a tailwind to economic recovery. With a normal monsoon, the comfortable buffer should keep food prices comfortable, he said. However, RBI noted that rising crude prices and higher logistic costs can push up prices and core prices may remain elevated. "Global demand condition is expected to improve with fiscal stimulus and higher vaccination," Das noted.
>> Forex Reserves: Das said that the RBI is actively engaged in forex market as strength of financial system is crucial for fighting against pandemic. "The exchange rate is stable despite global spillovers and the forex reserves have risen to $598 billion. We are within striking distance of reaching $600 billion on Forex Reserves," he said.
>> On tap liquidity window of Rs 15,000 crore for contact-intensive sectors like hotels and salons: Governor Das announced an on tap liquidity window for contact intensive sectors. "In order to mitigate the adverse impact of the second COVID wave on contact intensive sectors, a separate liquidity window of Rs 15,000 crore is being opened till March 31, 2022, with tenors of up to 3 years at the repo rate," Das said. Under the scheme, banks can provide fresh lending support to hotels restaurants tourism, travel operators, adventure and heritage facilities, aviation ancillary services (ground handling and supply chains) and other services that include private bus operators, car repair services, rent a car services providers, event/conference organisers, spa clinics and beauty parlours and saloons.
>> G-SAP 2.0 of Rs 1.2 lakh crore in Q2FY22: Governor Das announced that another round of Government Securities Acquisition Program (G-SAP) worth Rs 40,000 crore will be conducted on June 17. Additionally, G-SAP 2.0 of Rs 1.2 lakh crore will be conducted in Q2 FY22. “Auctions under G-SAP 1.0 have evoked keen interest from market participants. GSAP 1.0 evoked keen interest with bid-cover ratios of 4.1 and 3.5 in two auctions. We expect the market to respond positively to G-SAP 2.0,” Das said.
>> Special liquidity facility of Rs 16,000 crore to SIDBI: The RBI is also extending special liquidity facility of Rs 16,000 crore to SIDBI to further support MSMEs. Under the Resolution Framework 2.0, the RBI will expand coverage of borrowers in scheme of borrowers up to Rs 50 crore, from the earlier Rs 25 crore. We have also decided to permit authorised dealer banks to place margins on behalf of foreign portfolio investors (FPIs), and regional rural banks (RRBs) are allowed to issue certificate of deposits (CDs) with option to buyback the CDs. All issuers of CDs will be permitted to buyback their CDs before maturity, on certain conditions.
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RBI Monetary Policy: Industry Reactions- Financial Services
Raghu Kumar, Co-founder of RAIN Fund - an algo trading platform
There was no surprise today, with the RBI keeping its headline key lending rate unchanged at 4% as per market expectations. The bigger takeaway was a downward revision of real GDP growth for 2021-2022. While earlier the figure was 10.5%, the expectation is now at 9.5%. This was largely driven by a downward revision of Q1 GDP, which was expected to come in at 26.2% but was revised down to 18.5%, a delta of -7.7 percentage points. We hope that going forward, GDP numbers will be aligned with expectations. In intraday trading, the markets have been flat through the day.
RBI Monetary Policy | Industry Reactions- Financial Services
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities
Today, the market remained completely flat, however, select mid-cap and small-cap stocks closed higher with decent gains. The NBFCs closed higher while the bank stocks ended lower. Global facing auto companies like Bharat Forge and Tata Motors did exceptionally well and closed at the highest point of the day. We saw some value buying in the metal sector and stocks like NMDC, VEDL and JSW STEEL closed in the positive territory. On a weekly basis, for the third consecutive week, the market closed in the positive territory under the leadership of the Energy sector. NBFCs, Auto and Commodities also helped the market to close above the highest level of the previous rally which was at 15431. During the week FIIs sold to the tune of Rs 4500 crores but in the month of June, to date, the FIIs infused net Rs 1550 crores in the equities. Technically, the 15550 and 15400 levles would be major supports for Nifty and on the higher side 15800, 16000 and 16200 would be major levels to arrest the bull run. The basic trend of the market is bullish but in the absence of domestic flows, our markets would start following the global cues, which are mixed and sensitive to the pace of inflation. In the coming week, global cues could dominate the market. For the week the strategy should be to buy on dips between 15550/15450 with a final stop loss at 15350 levels. The focus should be on Auto, Insurance, Commodities and technology companies.
RBI Monetary Policy: Industry Reactions- Financial Services
Arun Nayyar, CEO, NeoGrowth Credit Pvt Ltd-
RBI has maintained stability in interest rate and liquidity in the system. This will encourage the credit off-take and maintain benign interest rate scenario in the money market system. The special liquidity to SME sectors is the further boost to GDP growth for FY2022
RBI Monetary Policy: Industry Reactions- Representative Body
Dr. Rajeev Singh, Director General, Indian Chamber of Commerce (ICC)
ICC highly appreciates Apex Bank’s decision to step up its efforts to ensure liquidity in the system with another G-SAP worth Rs. 1.2 lakh crore planned for this fiscal year. In addition to that, RBI has kept the repo rate unchanged at 4 per cent. Which, ICC feels shall further help home buyers. As prevailing low home loan rates are already enticing for homebuyers, with inflation set to be high and economic recovery slow due to surge of Covid, residential real estate will continue to attract investment as it is a safe-haven asset.
RBI Monetary Policy: Industry Reactions- Financial Services
Niraj Kumar, Chief Investment Officer, Future Generali India Life Insurance Co. Ltd:
While the MPC has toned down the GDP forecast to 9.5%, it has resorted to extend measures to support growth. The extension of separate liquidity window for contact intensive sectors along with additional liquidity to SIDBI and the expansion of the scope of restructuring 2 framework to more borrowers, is indeed a welcome move for the liquidity strapped sectors. Overall, a Growth supportive policy focused on nurturing the nascent growth in the econom
RBI Monetary Policy: Industry Reactions- Financial Services
Niraj Kumar, Chief Investment Officer, Future Generali India Life Insurance Co. Ltd:
With Today's Policy verdict, RBI continues to showcase its unflinching resolve to support the markets and economy, at a time when it’s juxtaposed with twin challenges of growth due to second Covid wave and rising commodity prices obscuring the inflation outlook. The MPC has extended the financial safety net to assuage the stress in the system, while reassuring the market of maintaining ample liquidity and remaining accommodative to nurture growth as long as necessary. The targeted redressal of concerns around absorption of elevated borrowing programme in FY22 by way of announcing another round of GSAP 2 of 1.2 lakh cr, is indeed another hallmark move by MPC.
RBI Monetary Policy: Industry Reactions- Financial Services
Rajee R, Chief Ratings Officer, Brickwork Ratings
In line with BWR expectations, RBI has maintained its status quo on policy while reiterating that this stance will continue as long as necessary to support growth and help an economy battling for revival. Opening a Rs 15,000 crore On-Tap Liquidity Window for the stressed contact intensive sectors is expected to provide much-needed succour. Continuing with its measures to ensure smooth liquidity management and accommodative financial conditions, RBI announced G-SAP 2.0 of Rs 1.2 lakh crores. SLF of Rs 16,000 Crore to SIDBI for on-lending and refinancing and the enhancement in limit for restructuring of loans by banks to Rs 50 crore from Rs 25 crore are welcome moves to support MSMEs. We expect that the steps announced would increase consumption demand and aid incremental economic activity.
RBI Monetary Policy: Industry Reactions- Financial Services
CH. S. S. Mallikarjuna Rao, MD & CEO, PNB:
The RBI has once again come out with proactive set of announcements to revive the economic growth amid surge in second wave of pandemic. The decision of keeping the repo rate unchanged along with maintenance of accommodative stance is on expected lines and necessary to mitigate the growth uncertainty and inflation concerns. Announcement of on tap liquidity facility of Rs 15,000 crore will ensure credit flow to the contact intensive sectors and MSMEs including hotels, tourism, aviation, etc. which have been adversely impacted. Further, resolution of stress of MSMEs has also been addressed through enhancement of exposure thresholds to Rs. 50 crore under resolution framework 2.0. Availability of NACH on all days of the week will further the financial inclusion objectives through Direct Benefit Transfer (DBT).
RBI Monetary Policy: Industry Reactions- Financial Services
Pallavi Shrivastava, Co-founder, Progcap:
We welcome RBI’s restructuring scheme under resolution framework 2.0 as it offers the much-needed relief to select MSMEs, non MSMEs small businesses which have been impacted drastically in the second wave of Pandemic The availment of this restructuring scheme will not only ensure smooth flow of liquidity, at reasonable costs but will also benefit the MSME’s in long run by restructuring the account without classifying it as an NPA. Further, it will act as an opportunity for lenders like us to grant surplus financial support that will empower small and medium businesses (SMBs) to progress without obstacles.
RBI Monetary Policy: Industry Reactions- Financial Services
Ram Raheja - Director, S Raheja Realty:
While repo rate will continue at 4.00% and reverse repo rate at 3.35% amid Covid-19 uncertainty, most banks have used this as the benchmark for their loans. A continuation of this low interest rate regime works well for borrowers. With no hike in repo rate, homebuyers can plan for a home loan in the near future while also getting enough time for their home buying process and still can get loans at prevailing low rates. At today’s time as we are seeing RBI and banks are now focusing on other essential sectors to bring all sectors back in green which will work well in reshaping the economy.
RBI Monetary Policy: Expert Reactions - Economist
Indranil Pan, Chief Economist at YES Bank:
As was expected, there were no change in the headline monetary policy rates as also the stance. In his statement, the Governor acknowledges the growth risks and now projects a lower real GDP growth for the year at 9.5 percent. Inflation projections have been raised too. Given the current evolution of the growth-inflation dynamics, there was absolutely no scope for the RBI to change its policy rates. Instead, the RBI endeavoured to keep the system fluid with adequate liquidity and also targeting rescue operations for the most stressed sectors in the economy. Consequently, a liquidity window was opened up for the contact intensive sectors that continue to totter with the burden of the pandemic. SIDBI was provided with a special liquidity facility to on-lend to MSMEs, specially the smaller ones. To enable the government to borrow at attractive rates, another round of bond buying was announced under G-SAP 1.0 while a G-SAP 2.0 was announced. We think that over the current FY, the RBI will not have any leeway to change its interest rates to provide support to the economy. Instead, it will do whatever necessary to push credit and liquidity to the stressed areas of the economy so as to prevent erosion of the supply chains in the economy.
RBI Monetary Policy: Industry Reactions - Financial Services
Gaurav Awasthi, Senior Partner, IIFL Wealth Management:
The RBI policy was on expected lines with no change in rates and a continued accommodative stance. The RBI maintains its focus on supporting growth and ensuring orderly interest rates . The increased GSAP allocation was in line with its focus. GDP projections were reduced downwards to incorporate the impact of the second wave of the pandemic on the economy. The inflation projections need to be tracked aggressively given the emergence of commodity and food inflation globally since a comeback of inflation may make the job of RBI more tricky going ahead.
RBI Monetary Policy: Industry Reactions - Financial Services
George Alexander Muthoot, Managing Director at Muthoot Finance:
RBI left the policy rates unchanged for sixth straight time and has avowed to continue accommodative stance as long as necessary to revive growth and help sustain it on a durable basis. This commitment by the central bank was supported by additional measures announced today such as a separate liquidity window of Rs. 15,000 crore for certain contact-intensive sectors and enhancing exposure threshold to Rs. 50 crore from Rs. 25 crore for MSMEs, small businesses and individuals for business loan purposes under Resolution Framework 2.0. Such steps will help borrowers to better mitigate the impact of pandemic’s second wave and we stand resolutely with every Indian to support all finance needs for a truly Atmanirbhar Bharat.”
RBI Monetary Policy: Industry Reactions - Financial Services
Anagha Deodhar – Chief Economist, ICICI Securities:
As expected, the MPC voted unanimously to keep repo rate unchanged and the stance of monetary policy ‘accommodative as long as necessary’. The decision to hold rates came on the back of a difficult backdrop of slowing growth are rising inflation. The MPC upped inflation forecast for better part of FY22 by 20-30bps and lowered GDP growth forecast sharply to 9.5%, mainly due to lower than expected growth in H1FY22. This shows that the committee’s priority is supporting growth recovery. The RBI also announced on-tap liquidity window of Rs 150bn for contact-intensive sectors, additional liquidity facility of Rs 160bn to SIDBI and enhanced the threshold for resolution. Moreover, it announced purchase of government securities worth Rs 1.2trn under GSAP 2.0 in Q2FY22. All these measures together are likely to keep financial conditions in the economy benign and support recovery.
RBI Monetary Policy: Key highlights of Governor Shaktikanta Das' speech today
RBI Governor Shaktikanta Das outlined reasons why the key policy rates were left unchanged and listed out some fresh measures to assist the COVID-hit businesses.... Read More
RBI Monetary Policy: Expert Reactions - Advisory Services
Kunal Valia, Advisor, Smart Beta and Index Strategies at Waterfield Advisors:
Lower for Longer is the message from the Reserve Bank of India. The Central bank's focus on Growth over inflation continued from the last policy meet in April. During the current year so far, the RBI has undertaken regular OMOs and injected additional liquidity to the tune of Rs 36,545 crore (up to May 31) in addition to Rs 60,000 crore under G-SAP 1.0. RBI further announced bond purchases of Rs 40,000 crore under G-SAP 1.0 in June 2021. It has also been decided to undertake G-SAP 2.0 in Q2:2021-22 and conduct secondary market purchase operations of Rs 1.20 lakh crore to support the market.
RBI Monetary Policy | Have major concerns about cryptocurrencies, no change in our position
The Reserve Bank of India (RBI) has major concerns about cryptocurrencies which it has conveyed to the government and there has been no change in its position on digital coins, Governor Shaktikanta Das said on June 4. This come a few days after the RBI issued a clarification as banks warned customers against using their services for trading in cryptocurrencies, which have seen a booming interest among Indians even though they operate in a grey area.
"We have major concerns on cryptocurrency, which we have conveyed to the government. With regard to advice to investors, well, central banks don't give any investment advice. It's up to each investor to make his own appraisal, to do his own due diligence and take a very careful call with regard to his own investments," Das said during a press conference after sharing the outcome of the monetary policy committee (MPC) meeting.
“There is no change in our position. Our circular clarifies our position very well,” Das said in response to a query on its May 31 clarification. Read more here
RBI Monetary Policy: Unchanged rates positive for home buyers, real estate sector
The Reserve Bank of India on June 4 left interest rates unchanged at a record low, a move that is expected to help homebuyers as well as the real estate sector. Announcing the outcome of the bi-monthly policy review, RBI governor Shaktikanta Das said the monetary policy committee held the repo rate at 4 percent and reverse repo rate at 3.35 percent. Unchanged rates mean that home loans won't get expensive and buyers can continue to take advantage of the prevailing low rates, which is also expected to sustain demand. Read more here
RBI Monetary Policy: Industry Reactions - Real Estate
>> Surendra Hiranandani, chairman and Managing Director, House of Hiranandani:
These set of buyers are apprehensive in coming ahead and have instead chosen to wait to buy a home. There is a need for stimulant policy measures that would enhance liquidity for the sector, ease credit provisions and increases buyers’ confidence.
>> Lincoln Bennet Rodrigues, founder and chairman, Bennet & Bernard Group, known for luxury holiday homes in Goa: Going forward, we would also like to see reduction in stamp duty and registration charges to push demand further in the real estate sector that forms the backbone of several other sectors.
>> Amit Goyal, CEO, India Sotheby's International Realty: Unchanged rated were a big positive and for a homebuyer, interest rates on loans would continue to remain at a historic low.
>> Ankit Kansal, founder and MD 360 Realtors: Pent up demand, structural transformations, and a healthy economic outlook ( around 8-9% for FY 22) would drive the market in a positive direction. Authorities should look into rising prices of key construction materials such as cement and steel.
RBI Monetary Policy: Rate decision on expected lines, then what is pulling the market lower?
At first glance, it appears that the Indian market had little to cheer about the status quo on key lending rates and stance by the Reserve Bank of India (RBI).
Erasing all the early gains, the market benchmarks - the Sensex and the Nifty - traded in the red after the RBI MPC outcome. Sensex fell over 100 points and Nifty slipped to 15,660. At 11:15 hours, Sensex was 120 points, or 0.23 percent, down at 52,112 and Nifty was 29 points, or 0.18 percent, down at 15,661.
What appears to have disappointed the market is the RBI's inflation projection, say experts. CPI inflation is projected at 5.1 percent for FY21-22. Inflation expectations for Q1 is 5.2 percent, Q2 is 5.4 percent, Q3 is 4.7 percent and Q4 is 5.3 percent. Read more here
Industry Reactions - Real Estate
Samantak Das, chief economist and Head of Research & REIS (India):
Recovery in residential real estate that was witnessed during January-March 2021 quarter was impacted by the lockdowns introduced to control the pandemic resurgence. Though the competitive mortgage rates are expected to provide long-term support for sustained growth of real estate, overall economic recovery leading to job and income growth will be contributing factors for housing demand. We believe that low home loan interest rates, realistic property pricing, the focus of developers on project completion and economic recovery will take the residential sales in all likelihood to better levels than 2020.
RBI Monetary Policy: Market LIVE Update at 1 PM
Benchmark indices were trading marginally lower in the afternoon trade after RBI kept the rates unchanged.
At 13:00 IST, the Sensex was down 59.56 points or 0.11% at 52172.87, and the Nifty was down 5.20 points or 0.03% at 15685.20. About 1685 shares have advanced, 1144 shares declined, and 124 shares are unchanged.
ONGC, Grasim, Coal India, L&T and IOC were among major gainers, while losers were Nestle, Hindalco, Titan Company, HUL and HDFC Bank.
Oil & gas and capital goods indices added 1 percent each, while bank stocks were under pressure.Follow our Market LIVE blog here
RBI Monetary Policy: Industry Reactions - Real Estate
Anuj Puri, Chairman, ANAROCK Property Consultants:
It is certainly positive for home-loan borrowers as the floating retail loan rates (which are directly linked to external benchmark repo rates) have been at the lowest level of the last two decades. The continuation of the low-interest rate regime would work well for all borrowers as the high affordability environment was likely to continue for some more time, he said.
RBI Monetary Policy: Industry Reactions - Financial
Amar Ambani, Senior President and Head of Research – Institutional Equities, Yes Securities:
With growth slowing and rise in inflationary pressures, RBI expectedly kept a status quo on the policy rates and maintained accommodative stance, signalling continuation of easy financial conditions. Downward revision in FY22 GDP growth projection to 9.5% was quite expected, but seems little optimistic when compared with consensus estimates. Nevertheless, RBI pursued its broad intent of plugging weak spots in the economy by providing on tap liquidity with additional lending to distressed and contact-sensitive sectors.
On inflation, the CPI projection of an average of 5.1% for FY22 looks credible as higher oil and commodity prices is leading to elevated price pressure. Though healthy monsoon and higher crop output may somewhat contain food inflation. Announcement of another round of G-SAP and devolvement of various bond auctions clearly convey RBI’s stance on interest rates and government borrowing costs.
On the repo rate, we have hit the floor, with further rate cut completely ruled out given the prevalent negative real interest rates. With the space for traditional monetary policy being constricted, we expect the RBI to continue to use its balance sheet to keep financial market conditions easy.
RBI Monetary Policy: Industry Reactions
Anish Mashruwala, Partner, J Sagar Associates:
The RBI Governor’s statement continued the cautionary, caliberated and need-of-the-hour stance of the RBI. Given the clear impact of COVID-19’s second wave on non-urban areas, the focus on the wider local economy, especially the MSME and the mom and po shops which are still vital to the overall fabric of India, has been a major focus of the proposed measures. Having addressed the creation and supply of liquidity, the RBI has consciously considered the need to ensure equal distribution of credit and liquidity to the particularly affected sectors. The specific measures, namely liquidity to the contact intensive businesses which have faced the largest brunt of the pandemic, the expansion of the borrower coverage by doubling the maximum exposure threshold to Rs 50 crores and the additional liquidity via SIDBI to cater to these needs, are all welcome to support the overall growth of the Indian economy. In that sense today’s statement reflects the much needed moral compass of a national institution in times of a pandemic.
RBI Monetary Policy: Industry Reactions
Jimeet Modi, Founder & CEO Samco Group:
Exactly a year ago, RBI had cut the repo rate down to 4% from 5.15%, pre-pandemic levels and the rates have remained unchanged till now. India’s accommodative stance continues to remain inline with global peers such as Fed and ECB and this times policy was also aligned with market expectations. The spectrum of forecasts both in terms of GDP and inflation were balanced out and remained more or less on the optimistic side. The RBI has indeed given a helping hand, in whatever way possible to boost liquidity for MSMEs, the hardest hit space in this pandemic. Support to the contact intensive sectors is definitely a move in the right direction although the relief package could have been higher to hold the bottom of the pyramid from losing ground. Various other decisions in terms of opening the debt markets to FPIs and facilitating a Rs. 1.2 Lakh Cr in Q2FY22 for GSAP2.0 will aid to safeguard our economy from contraction and keep markets buoyant.
RBI Monetary Policy: Industry Reactions - Funds
Sandeep Bagla, CEO Trust AMC: RBI has maintained accommodative stance, keeping all rates unchanged, vowing to keep conditions as supportive as possible to revive growth. Impact of second wave on inflation could be handled through supply side measures. The policy bodes well for financial assets as well as the real economy, growth and employment as RBI has again stated its resolve to maintain conducive conditions to support durable growth. The policy is pragmatic, at the same time progressive and preemptive in its approach.
EXPLAINED | The relationship between Monsoon and Inflation
The south-west monsoon hits Kerala on June 3, the first normal rainfall in three years after two above-average monsoon rains in the last two years. It is welcome news for an economy dented by a second…... Read More
RBI Monetary Policy: India's forex reserves are in striking distance of $600 billion
The Reserve Bank of India announced during its Monetary Policy announcement on June 4 that India's forex reserves have risen to $598 billion. "The strength of financial system is crucial for fighting against the pandemic. The exchange rate is stable despite global spillovers. Forex reserves have risen to $598 billion. We are within striking distance of reaching $600 billion on Forex Reserves," RBI Governor Shaktikanta Das noted. Read more here
RBI Monetary Policy: CPI inflation projection rate at 5.1 percent for 2021-22
The Reserve Bank of India Governor Shakuntala Das announced a projection for Consumer Price Index (CPI) inflation at 5.1 percent for FY 2021-22. Das pegged the quarter wise inflation projections for FY22 at 5.2 percent in Q1, 5.4 percent in Q2, 4.7 percent in Q3 and 5.3 percent in Q4, with risks broadly balanced. Normal monsoon and business resilience can provide a tailwind to economic recovery. With a normal monsoon, the comfortable buffer should keep food prices comfortable, he said. However, RBI noted that rising crude prices and higher logistic costs can push up prices and core prices may remain elevated. "Global demand condition is expected to improve with fiscal stimulus and higher vaccination," Das noted. Read more here
RBI Monetary Policy: RBI Governor Shaktikanta Das announces G-SAP 2.0 of Rs 1.2 lakh crore in Q2 FY22, additional purchase under current round
The Reserve Bank of India (RBI) Governor Shaktikanta Das on June 4 announced that another round of Government Securities Acquisition Program (G-SAP) worth Rs 40,000 crore will be conducted on June 17. Additionally, G-SAP 2.0 of Rs 1.2 lakh crore will be conducted in Q2 FY22. “Auctions under G-SAP 1.0 have evoked keen interest from market participants. GSAP 1.0 evoked keen interest with bid-cover ratios of 4.1 and 3.5 in two auctions. We expect the market to respond positively to G-SAP 2.0,” Das said. Read more here
RBI Monetary Policy: RBI announces on tap liquidity window of Rs 15,000 crore for contact-intensive sectors like hotels and salons
RBI governor Shaktikanta Das on June 4 announced additional measures to help ailing businesses. RBI announced an on tap liquidity window for contact intensive sectors. "In order to mitigate the adverse impact of the second COVID wave on contact intensive sectors, a separate liquidity window of Rs 15,000 crore is being opened till March 31, 2022, with tenors of up to 3 years at the repo rate," Das said.
Under the scheme, banks can provide fresh lending support to hotels restaurants tourism, travel operators, adventure and heritage facilities, aviation ancillary services (ground handling and supply chains) and other services that include private bus operators, car repair services, rent a car services providers, event/conference organisers, spa clinics and beauty parlours and saloons. Read more here
RBI Monetary Policy: Real GDP growth projected at 9.5% in 2021-2022, says Shaktikanta Das
RBI Governor Shaktikanta Das announced that RBI expects real GDP growth at 9.5 percent in 2021-2022 consisting of 18.5 percent in first quarter, 7.9 percent in the second quarter, 7.2 percent in the third quarter and 6.6 percent in the forth quarter of 2021. The RBI had earlier forecasted 10.5 percent GDP growth for 2021-2022. For Q1, RBI had expected 26.2 percent, much higher than the now revised figure. RBI had also lower forecast for Q2 at 7.9 vs 8.3 percent forecasted earlier. The central bank had pegged Q3 growth at 5.4 percent and Q4 at 6.2 percent, both lower than the now revised growth figure. Read more here
RBI Monetary Policy: MPC Keeps Repo Rate Unchanged At 4%
In the last policy review, the RBI had projected the GDP to grow by 10.5 percent in the fiscal year 2022. But, this estimate has been revised factoring in the evolving economic situation... Read More
Market LIVE Updates: Indices trade flat as RBI keeps repo rate unchanged at 4 percent
Follow our Market LIVE blog here for the latest news and developments on the same
RBI Monetary Policy LIVE | RBI Governor Shaktikanta Das:
The RBI is also extending special liquidity facility of Rs 16,000 crore to SIDBI to further support MSMEs. Under the Resolution Framework 2.0, the RBI will expand coverage of borrowers in scheme of borrowers up to Rs 50 crore, from the earlier Rs 25 crore. We have also decided to permit authorised dealer banks to place margins on behalf of foreign portfolio investors (FPIs), and regional rural banks (RRBs) are allowed to issue certificate of deposits (CDs) with option to buyback the CDs. All issuers of CDs will be permitted to buyback their CDs before maturity, on certain conditions.
RBI Monetary Policy LIVE | RBI Governor Shaktikanta Das:
The RBI is fully committed to enable the environment to preserve financial stability. We are opening a Rs 15,000 crore On-Tap Liquidity Window at repo rate for contact intensive sectors. This will provide additional lending to the hospitality, bus operators, tourism, salons, aviation ancillary services.
RBI Monetary Policy LIVE | RBI Governor Shaktikanta Das:
The RBI is actively engaged in forex market. Strength of financial system is crucial for fighting against pandemic. The exchange rate is stable despite global spillovers. Forex reserves have risen to $598 billion. We are within striking distance of reaching $600 billion on Forex Reserves.
RBI Monetary Policy LIVE |
RBI Governor Shaktikanta Das: Focus of RBI is turning to equitable distribution of liquidity. We shall continue with proactive and pre-emptive approach of transmission to return economy to growth. Rs 36,545 crore liquidity infused in the industry. Another operation under government securities 1.0 (G-sec) for Rs 40,000 crore worth of purchase will be conducted. Further, G-SAP 2.0 worth Rs 1.2 lakh crore will be taken in the second quarter FY22 to support the market. The RBI is actively engaged in forex market. Strength of financial system is crucial for fighting against pandemic.
RBI Monetary Policy LIVE | RBI Governor Shaktikanta Das:
Enhanced and targeted policy support is needed for exports. Rural demand is expected to remain strong due to normal monsoon forecast. The Real GDP is estimated at 9.5 percent in FY21-22, against the 10.5 percent forecast earlier. Of this, Q1 is expected to be 18.5 percent (vs 26.2% forecast earlier), Q2 - 7.9 percent (8.3 percent), Q3 - 7.2 percent (5.4 percent), Q4 - 6.6 percent (6.2 percent).
CPI inflation is projected at 5.1 percent for FY21-22.Inflation expectations for Q1 is 5.2 percent, Q2 - 5.4 percent, Q3 - 4.7 percent, Q4 - 5.3 percent.
Adequate system level liquidity has been ensured and targeted liquidity to stressed entities have been provided.
The CPI is estimated at 5.1 percent in FY21-22, this would be 5.2 percent in Q1, 5.4 percent - Q2, 4.7 percent - Q3, 5.3 percent - Q4.
Money aggregates (M3) grew by 9.9 percent year-on-year (YoY) in May 2021, while bank credit grew by 6 percent YOY in May 2021. Focus of RBI is turning to equitable distribution of liquidity
RBI Monetary Policy LIVE |
Considering all factors such as coronavirus pandemic, PMI data, companies adapted to pandemic working and expectation of normal monsoon, real GDP is seen at 9.5 percent in FY21-22. CPI inflation is seen at 5.1 percent FY21-22.: RBI Governor Shaktikanta Das
RBI Monetary Policy LIVE |
Core price pressures may remain elevated. Consumer inflation pass through may not be high due to tapered demand. The second wave has been highly transferable to rural and semi-urban areas. Impact on economic activity is expected to remain contained due to lower restrictions. Urban demand, in high frequency indicators, recorded sequential moderation in April-May 2021. Domestic monetary and financial condition remain accomodative for economic recovery. Rebound in global trade is taking place. Global demand condition is expected to improve with fiscal stimulus and higher vaccination: RBI Governor Shaktikanta Das
RBI Monetary Policy LIVE |
The greater the difficulty, more glory in surmounting it. Real GDP contraction at 7.3 percent for FY21. Abhishek Kothari: Dent on urban demand and spread of COVID-19 in rural areas will impact GDP growth negatively. Inflation print for April at 4.3 percent has brought relief: RBI Governor Shaktikanta Das
RBI Monetary Policy LIVE |
The RBI's Monetary Policy Committe (MPC) has decided to continue with accomodative stance until necessary to mitigate impact of COVID-19. The Marginal Standing Facility (MSF) rate and bank rates remain unchanged at 4.25 percent. Reverse repo rate also remains unchanged: RBI Governor Shaktikanta Das
RBI Monetary Policy LIVE:
MPC keeps status quo, continues accomodative stance: Governor Shaktikanta Das
