RBI Monetary Policy Highlights: Repo rate hiked by 50 bps to 5.9%, FY23 inflation projection retained at 6.7%

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India has got responses from up to five countries for rupee settlement mechanism, more interested: RBI deputy governor

-India has received responses from four to five countries for its mechanism for international trade settlement in rupees, while other nations have also shown interest, a deputy governor at the Reserve Bank of India said on September 30.


-“The response has been fairly good but since the process involves a lot of vetting at the level of banks, at the level of the central bank, at the level of the government, the initial process is taking some time,” T Rabi Sankar told reporters in Mumbai at a post-policy interaction. Sankar did not respond to a query on whether Russia was one of the countries that was interested in the mechanism.

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See no reason to extend tokenisation deadline as 35 crore tokens already created, says RBI Deputy Governor T Rabi Sankar

-The Reserve Bank of India (RBI) has been in talks with stakeholders for implementation of tokenisation and there is no reason to delay it any further, said Deputy Governor T Rabi Sankar ahead of new card storage norms kicking in from October.

-"The feedback we have from all stakeholders is that it (ecosystem) is perfectly ready. I understand there are a few participants who may not be ready, but that would probably be because of their unwillingness to comply. We don't believe that we should hold back efforts because of such laggards," he said.

-The deadline to implement tokenisation has been delayed multiple times over the past two years at the request of stakeholders, most recently by three months from 30 June 2022.

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RBI MPC lowered real GDP growth estimate for FY23 to 7% from 7.2%


-Reserve Bank of India (RBI) governor Shaktikanta Das projected real GDP growth rate for FY23 at seven percent on September 30 down from the 7.2 percent estimated earlier.


-Das estimated growth for the second quarter of FY23 at 6.3 percent (versus 6.2 per cent earlier), for the third quarter at 4.6 percent (4.1 per cent earlier) and for the fourth quarter at 4.6 percent (four per cent earlier).


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JUST IN: Letter to government on failing to meet inflation target won't be made public: RBI Governor

JUST IN: Expectation is September inflation could be higher than 7%: RBI Governor Shaktikanta Das 

We expect not more than 100 bps hikes ahead: Madhavi Arora, Emkay Global 



-''Clearly, the fast-evolving world order and consistent repricing of Fed’s outsized hikes are strong-arming the EMs. This painful adjustment has not spared the RBI either, which realised the net cost of a supposed soft signalling via shallow hike could be higher than a larger hike of 50bps.


-This exposes the instability inherent with the classic EM central bank trilemma: one cannot have a stable currency, unfettered capital flows, and independent monetary policy all at the same time.


-This conscious front-loading could give them some breather next year on shallow hikes ahead. With inflation likely to be largely in line with RBI’s estimates, this week’s 50bps hike will make the ex-post forward real repo rate positive, albeit still lower than the RBI’s estimated real neutral rate of 0.8-1%.


-At this point, we still think that the RBI would not go too restrictive and terminal rate could hover near the estimated real rates, implying not more than 100bps hikes ahead, including today’s decision,'' said Madhavi Arora, Lead Economist, Emkay Global Financial Services.
 

MPC to discuss RBI's reply to government on failing to meet inflation target


-At the post-policy presser, RBI Governor Shaktikanta Das said that they will write a letter to government explaining the failure to meet inflation target below 6 per cent. 


-The MPC will have a meeting to discuss RBI's reply to government on failing to meet inflation target


- Expecting inflation to come down closer to target over two-year cycle, added RBI Governor

Want to state clearly that liquidity in banking system not in deficit: RBI Governor


-Systemic liquidity over Rs 5 lakh crore, no concerns on liquidity being suddenly tight: RBI Governor

-Liquidity is not tight, net LAF has been in surplus for last two years, said Shaktkanta Das at post-policy press conference

RBI Monetary Policy | What is the message from Shaktikanta Das to markets?


-The message from Reserve Bank of India Governor Shaktikanta Das to markets on Friday is crystal clear -expect more rate hikes over the next few quarters - as the central bank continues its big battle against zooming prices even at the cost of hurting growth for the near term.


-There was enough hints, during the governor's address, to show that there isn't any compromise on the war against inflation. A 50-basis-point rate hike won't be the last in this rate hike cycle.


-Look at the numbers. By the RBI's own admission, the threat of high inflation is far from over.  Das said the retail inflation is likely to average at 6 percent in the second half of this year and 6.7 percent for the full year, way above the upper tolerance level of 6 percent.


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RBI gave a “Mai Hoon Na” policy: Nilesh Shah,  Group President & MD, Kotak Mahindra Asset Management Company


-“The RBI gave a “Mai Hoon Na” policy doing a fine tight rope walking between Inflation, Growth and Stability. The RBI is batting on a difficult pitch against a hostile bowling. Rapidly deteriorating global situation, drawdown of systematic liquidity and FX reserves, inflationary pressure and Growth concern are testing the RBI.


-The RBI has so far batted with few misses. Most important thing is that they haven’t lost the wicket and kept score board moving. The RBI has been proactive and data driven to deal with rapidly evolving situation. They have assured the market that they are in safe hands in the global storm,'' said Nilesh Shah, Group President & MD, Kotak Mahindra Asset Management Company.

RBI to seek feedback for additional framework on securitisation of stressed assets


-Reserve Bank of India (RBI) will soon launch a discussion paper seeking industry feedback on introducing a framework for securitisation of stressed assets in addition to the asset reconstruction company (ARC) route, Governor Shaktikanta Das said on September 30.

-Currently, only the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act provides a framework for such securitisations by asset reconstruction companies (ARCs).

-“However, based on market feedback, stakeholder consultations, and recommendations of the task force on development of secondary market for corporate loans, it has been decided to introduce a framework for securitisation of stressed assets in addition to the ARC route, similar to the framework for securitisation of standard assets,” the central bank said.


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