RBI Monetary Policy HIGHLIGHTS: Repo rate unchanged at 4%; 24x7 RTGS from Dec 20

RBI Monetary Policy reactions: Siddhartha Sanyal, Chief Economist and Head of Research at Bandhan Bank

Siddhartha Sanyal, Chief Economist and Head of Research at Bandhan Bank said: “The RBI has strongly conveyed their commitment to support growth recovery, even when the MPC’s hands were virtually tied in today’s policy as regards the policy rates. Steps such as larger quantum of OMOs and OMOs in state government securities should offer cheer for the bond market, while on-tap TLTRO and rationalization of risk weightages of housing loans are meaningful steps in the right direction. We continue to expect discussion on rate cuts to be back on the table later during the year as inflation prints starts softening.”

RBI Monetary Policy: RBI to rationalise risk weightage on housing loans to push demand

In order to promote the housing sector, Reserve Bank of India on Friday decided to rationalise risk weightage on housing loans, making the product attractive for both borrower and lenders. With revision in the risk weightage, the requirement of capital provision for banks will come down. This will encourage banks to push housing loan products with attractive features. "Recognising the criticality of the real estate sector in the economic recovery, given its role in employment generation and the interlinkages with other industries, it has been decided, as a countercyclical measure, to rationalise the risk weights by linking them only with Loan to Value (LTV) ratios   for all new housing loans sanctioned up to March 31, 2022," RBI Governor Shaktikanta Das said. Such loans shall attract a risk weight of 35 per cent where LTV is less than or equal to 80 per cent, and a risk weight of 50 per cent where LTV is more than 80 per cent but less than or equal to 90 per cent, he said. This measure is expected to give a fillip to bank lending to the real estate sector, the statement on Developmental and Regulatory Policies said.

RBI Monetary Policy LIVE Updates: RBI keeps repo rate unchanged at 4%

         

Here are the major highlights from RBI Governor Shaktikanta Das’ address today:

• MPC Decides To Continue With Accommodative Stance               
• MSF Rate, Bank Rate & Repo Rate Remain Unchanged  
• MPC Votes Unanimously To Keep Policy Rates Unchanged          
• Global Eco Activity Has Rebounded  In Q3, Albeit Unevenly         
• There Is A Turn In The Wind, Not Imprudent To Dream 
• Investment In Retrenchment Globally, While Consumption, Exports Higher        
• Indian Economy Entering  Decisive Phase             
• Seeing Easing Of Contraction In Various Sectors Of Economy      
• Deep Contractions Of Q1 Are Behind Us               
• Silver Linings Visible In Easing Caseloads Across India      
• Rural Economy Looks Resilient  
• Foodgrain Production Set To Cross Another Record In 2021         
• Factories & Construction Activity Are Coming Back To Life            
• Mood Shifting From Fear  & Despair To Hope     
• Inflation Will Ease Closer  To Target By Q4FY21   
• Forward Looking Biz Expectations  Are Optimistic             
• GDP Growth May Turn Positive By Q4   
• India Likely To See A 3-speed Recovery W/Variations Across Sectors      
• Agri, Cons Goods, 2W, Power, Pharma Sectors To See Quicker Recovery              
• SEE FY21 GDP CONTRACTING BY 9.5%    
• Weighted Average Cost Of Borrowing In H1FY21 Is At 5.82%; Lowest In 16 Years
• Faster, Strong Rebound Is Feasible         
• Ready To Undertake Steps As Necessary Of Access To Liquidity, Easy Fin Conditions       
• Infusing Liquidity To Ensure Non-disruptive Borrowing Programme         
• Residual Govt Borrowing To Be Completed In A Non-disruptive Manner               
• Will Conduct Special & Outright Open Market Operations (OMOs)           
• RBI To Up Weekly OMO Purchases  To `20,000 Cr              
• Ways & Means Advance (WMA) Limit For  Central Govt Kept At `1.25 Lk Cr          
• Augmented Borrowing Forced By Fiscal Stimulus & Falling Tax Revenue
• Market Participants Need To Factor In RBI Signals While Buying Bonds   
• Expect Retail Inflation To Remain  Elevated In Sep, Ease Over Q3 & Q4   
• Aggregate Demand Remains Subdued  
• MPC HAS DECIDED TO LOOK THROUGH THE CURRENT INFLATION AS A TRANSIENT HUMP           
• To Conduct On Tap TLTRO Of `1 Lk Cr At Floating Rates Linked To Repo Rate        
• TLTRO Funds To Be Deployed In Corporate Bonds, Debentures 
• To Extend Held-to-maturity (HTM) Cap Hike To March 31, 2022 
• To Conduct Open Market Ops In  State Development Loans (SDLs)          
• OMOs In SDLs To Rationalise Their Spread Over G-Secs 
• To Discontinue System-based Caution Listing Of Exporters        
• To Discontinue System-based Caution Listing Of Exporters
• To Allow Banks To Increase Exposure To Retail, Small Borrowers To `7.5 Cr
• To Rationalise Risk Weights For All  New Housing Loans Until March 31, 2022       
• To Extend Scheme For Co-lending To All NBFCs, HFCs    
• Propose Round-the-clock Availability Of RTGS From December 2020       
• Payment System Operators To Be Licensed On A Perpetual Basis             
• Renewed Rise Of COVID-19 Infections Remains A Serious Risk

RBI monetary policy: It is a great shot in the arm for recovery, says SPJIMR's Ananth Narayan

Reserve Bank of India (RBI) governor Shaktikanta Das in the October policy said that the MPC has decided to look through the current inflation as a transient hump. Ananth Narayan, Professor at SPJIMR told CNBC-TV18 that given the demand destruction itself, it is a sensible and good strategy to adopt. However, he believes that markets will definitely celebrate as is a great shot in the arm for recovery. Narayan believes that this will be seen as a positive, both for bond as well as asset classes. Narayan further added that the ball is now firmly in the governments hands for some kind of a fiscal push as well.

The MPC Has Indicated They Are Concerned About Inflation

“The clear message is the MPC is saying we shall look through inflation, don’t worry about the current inflation prints, we are concerned about growth, we will look at growth even into next year and see growth as the primary focus; that is the foundational stone.”

RBI Is Trying To Keep The Risk-Free Rate Low

“I don’t think it could have done more to tell the market to bring down risk free rates. Whether it is the fact that they will do Rs 20,000 crore of OMOs, whether it was actually explicitly telling the market to bid aggressively into the options for government bonds, whether it was bringing down SGL rates as well by way OMOs into SDL, essentially the entire yield curve of risk free rates is keeping a lid on, probably trying to bring it down as well. He is telling the markets the yields cannot go up which means the market is encouraged to bring it down.”

RBI Monetary Policy LIVE Updates: Financial stocks rise post RBI policy decision; Nifty Fin Services up 1.9%

Banks and non-banking financial company (NBFC) stocks rose on Friday after the Reserve Bank of India kept the repo rate unchanged at 4 percent and maintained an accommodative stance. Not just that, the regulator proposed to start the round-the-clock availability of real-time gross settlement (RTGS) facility from December 2020 to facilitate swift payments to improve the ease of doing operations. Following the policy announcement, the Nifty Fin Services index surged 1.9 percent while Nifty Bank rose 1.6 percent. In comparison, the benchmark Nifty was up around half a percent. Continue Reading

RBI Monetary Policy LIVE Updates: Sensex up 200 points, Nifty nears 11,900 post RBI policy led by financials

Indian shares traded higher led by gains in financials after RBI announced its monetary policy. The Monetary Policy Committee (MPC) has voted unanimously to keep the repo rate unchanged at 4 percent in its policy review from October 7-9.  It decided to continue with an accommodative stance. RBI in its first official estimate said that it expects GDP to contract by 9.5 percent in FY21. 

RBI Monetary Policy LIVE Updates: RBI's new measures on home loans make them safer, says HDFC’s Keki Mistry

RBI's new measures on home loans make them safer. Risk weights to be assigned to all home loans under as per loan-to-value, average loan-to-value for HDFC is 60%, chief Keki Mistry tells CNBC-TV18, adding that, on-tap TLTRO would reduce cost of borrowing for NBFCs.

RBI Monetary Policy LIVE Updates: RTGS system for real-time fund transfer to become 24x7 from December, says RBI

The Reserve Bank of India (RBI) on Friday proposed to start the round-the-clock availability of real-time gross settlement (RTGS) facility from December 2020 for swift payments. This will improve the ease of doing operations, Reserve Bank of India (RBI) Governor Shaktikanta Das said while announcing the decisions taken by the central bank’s Monetary Policy Committee (MPC). Continue Reading

RBI Monetary Policy LIVE Updates: 10-year govt bond yield slips after RBI's announcement of OMOs; Rupee extends gains to highest since September 8

RBI Monetary Policy LIVE Updates: 9.5% contraction with further downside risk; RBI's first FY21 GDP estimate

The Gross Domestic Product (GDP) is expected to contract by 9.5 percent in FY21, with risks to the downside, Reserve Bank of India (RBI) Governor Shaktikanta Das said while announcing the decisions taken by the central bank’s Monetary Policy Committee (MPC). GDP contracted 23.9 percent in the first quarter of the fiscal, as per the estimates of the Central Statistics Office (CSO). In a statement after the meeting of the Monetary Policy Committee, RBI Governor Shaktikanta Das said the Indian economy is entering into a decisive phase in the fight against coronavirus. "The contraction in economic growth witnessed in the April-June quarter of the fiscal is behind us and silver linings are visible," Das said. Continue Reading

RBI Monetary Policy LIVE Updates:  On payments front Gov Das announces RTGS round-the-clock facility from Dec 2020

RBI Monetary Policy LIVE Updates: RBI will maintain comfortable liquidity conditions in the market

Here are the salient points from RBI Governor Shaktikanta Das' briefing on MPC decision:

RBI will maintain comfortable liquidity conditions in the market
Size of auction will be increased to Rs 20,000 cr per auction
RBI ready to conduct mkt ops to mitigate pressure from higher govt borrowing
Headline inflation persisting above upper band of RBI's tolerance tgt
Aggregate demand remains subdued
MPC has decided to look through current inflation 'hump' as transient
Propose to announce on tap TLTRO
With tenors of 3 years, total amount of Rs1 lakh cr at floating rate linked to policy rate
Held to Maturity: 22% of NDTL, limit is extended upto March 22

RBI Monetary Policy LIVE Updates: In its first official estimate, RBI expects FY21 GDP growth to contract by 9.5%

RBI Monetary Policy LIVE Updates: GDP growth may turn positive by Q4FY21

Here are the salient points from RBI Governor Shaktikanta Das' briefing on MPC decision:

• Inflation would ease closer to target by Q4FY21.
• Forward-looking biz expectations are optimistic.
• PMI for Sep rose to 56.9; highest since Jan 2012.
• Services PMI at 49.8 showing improvement over august.
• GDP growth may turn positive by Q4FY21.

RBI Monetary Policy LIVE Updates: Mood shifting from fear and despair to hope, says Gov Das

Rural economy looks resilient. Food grain production set to cross another record in FY21; Migrant labour is return to work in urban areas. Online commerce is booming, people are getting back to offices. Mood shifting from fear and despair to hope