Perspective on the ‘Monetary Policy’ by Rajani Sinha, Chief Economist & National Director – Research, Knight Frank India
“The RBI has taken reassuring steps to infuse additional liquidity into the housing sector through the interventions of increased financing to National Housing Bank and extension of priority sector tag for bank funding to NBFCs for housing loans.
However, given the inflationary concerns in recent months, RBI has maintained the status quo on key policy rates. At a time when rising second wave of COVID infections and subsequent lockdowns are derailing economic momentum, RBI interventions will help maintain adequate liquidity as well as prevent hardening of yields in bond market. These measures will ensure economic stability as well as keep real estate sector stay afloat during such precarious times. Hopefully, benign retail inflation on account of better monsoon and easing of crude oil prices, coupled with accommodative stance would translate into lowering of policy rate in near future.”
Views on RBI Policy: Dhiraj Relli, MD &CEO, HDFC Securities
“The outcome of the MPC meet was on expected lines as far as repo rates and stance are concerned. However, the announcement of secondary market G-sec acquisition programme (G-SAP 1.0), where the RBI will commit upfront to a specific amount of open market purchases of government securities with a view to enable a stable and orderly evolution of the yield curve amidst comfortable liquidity conditions, was a positive surprise. This shows the resolve of the RBI to keep Gsec rates under check despite the large borrowing program. The endeavour will be to ensure congenial financial conditions for the recovery to gain traction. The large amounts committed in Q1 and in April show the seriousness of the RBI in implementing the Gsec program.
The markets have reacted well to this measure as this will result in rates not rising and, in fact, easing down for businesses. The impact of the MPC announcements however will wither away in a couple of days time and the markets will keep responding to other triggers including Covid progress and corporate results.”
Rohit Poddar, Managing Director, Poddar Housing and Development Ltd on RBI's MPC announcement
“The first RBI policy of FY’22 with its continued accommodative stance to maintain liquidity surplus in the market can be viewed as being pragmatic. Though the RBI moves away from time-based guidance, it has prudently provided timelines to its liquidity-focused measures providing cushioning to the financial markets.
The equity markets will cheer with the announcement on RBI’s Government Securities Acquisition Programme. This will ensure government borrowing at a low cost and be able to address pandemic-related adversities from both economic and healthcare aspects.
From a real estate point of view, an additional Rs.10,000CR for NHB for fresh lending will create a seamless environment to sustain the business operation. As a major part of credit borrowing happens from NBFCs in the real estate sector, the extension provided till 30th September will boost liquidity even further.”
Quote on RBI MPC by Jimeet Modi, Founder & CEO, Samco Group
"The RBI continues to maintain their accommodative stance along with a dovish outlook, which hasn’t been much of a surprise to the Street. The repo rate along with the GDP forecast of 10.5% for FY22 was inline with expectations and infact the bond market cheered with a dip in yields post the announcement. The GSec Acquisition Programme of Rs. 1 Lakh Cr for this quarter was the clincher in the entire speech, however, there was only little the MPC could do given the uncertainty on the rising number of cases and vaccination drive. While their attempts to flatten the yield curve and enable sufficient liquidity through bond purchases in the system have worked in the economy’s favour so far, it will have to be seen how prompt the RBI remains if the condition worsens given the renewed lockdowns in a few states in India. The policy lagged aggressiveness and was more balanced this time, nevertheless the efforts do seem positive for the time being."
GSAP is not a one off measure, there will be more going ahead: RBI Guv
Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday said that the G-Sec acquisition program (GSAP) is in addition to normal instruments in their toolkit for liquidity management. "It is not a one-off measure. There will be more going ahead," he said while addressing a press conference. "Our signals, actions and communication must be read together. G-SAP is different from the usual OMO calendar. We have conducted total OMOs of Rs 3.13 lakh crore in FY21," he added. RBI has decided to put in place a secondary market Government Security Acquisition Programme (G-SAP) 1.0 for orderly evolution of the yield curve in FY22.
More here
RBI has ensured liquidity via TLTRO extension: PNB’s SS Mallikarjuna Rao
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Wednesday kept the benchmark repo rate unchanged at 4 percent in the April policy while maintaining an accommodative stance for as long as necessary amid rising inflation. Reacting to the policy, SS Mallikarjuna Rao, MD and CEO at Punjab National Bank (PNB) said that overall the policy is on expected lines. He also expects demand to come back once COVID recedes. “Overall it is a good policy, on expected lines to continue the liquidity in the market, continue the supply side in the market. We will have to wait and see how the pandemic impact will recede more effectively to create the demand,” he said. More here
Gaurav Awasthi, Senior Partner, IIFL Wealth Management on RBI Policy
The RBI decision to hold rates was on expected lines. The key was the government's comments on holding the policy accommodative as long as necessary rather than to a time-bound limit to support the economy . The G-Sec Acquisition Program will also lend support to the yields, which had risen substantially under pressure from rising government borrowings.
Post Policy Conference
"At the moment growth is not undermined due to rising COVID-19 cases. So far, current surge in infections will not impact growth as much as it did last year. Guidance on growth seems appropriate. At this point, have made reasonable assumptions," sayd Shaktikanta Das.
Post Policy Conference
"So far, current surge in infections will not impact growth as much as it did last year. Guidance on growth seems appropriate. At this point, have made reasonable assumptions," said Shaktikanta Das.
Post Policy Conference: Growth is of paramount importance at the current juncture. Mindful of the overall liquidity situation in the market, says Shaktikanta Das
Post Policy Conference: To exit accommodative stance, will have to wait for the situation to arise, says Shaktikanta Das
Post Policy Conference: GSAP will run alongside our normal liquidity operations, says RBI Deputy Governor Michael Patra
Post Policy Conference: Addressing overall liquidity situation in market to ensure orderly evolution of yield curve, says Shaktikanta Das
Post Policy Conference
Shaktikanta Das: G-sec acquisition programme is in addition to normal instruments in our toolkit for liquidity management.
RBI hikes payments bank deposit limit to Rs 2 lakh
The Reserve Bank of India (RBI) on Wednesday hiked the maximum end-of-day balance for payment banks to Rs 2 lakh, from Rs 1 lakh. "With a view to furthering the financial inclusion and to expand the ability of payments bank to cater to the growing needs of their customers, the current limit on maximum end of day balance of Rs 1 lakh is being increased to Rs 2 lakh per customer with immediate effect," RBI governor Shaktikanta Das said. Earlier, payments banks had urged the RBI to review the customer's deposit limit. Payment banks are savings account that can offer deposit services but cannot offer loans and advances to the customers.
Sandeep Bagla, CEO, TRUST Mutual Fund on RBI Policy
"Interest rates are likely to remain range bound going forward as RBI is committed to ensure easy liquidity and low repo rates. The increase in Government borrowings are likely to be partially offset by RBI OMOs and secondary market purchases of Government securities. Inclusion of government securities global bond indices will add to the demand. Corporate bond spreads are likely to remain at moderate levels on back of restrained supply and continued demand from institutional investors. Unless inflation expectations start increasing in the future, fixed income investors will do well to remain invested in Indian bonds."
Quote by Abheek Barua, Chief Economist, HDFC Bank on RBI Policy
"The RBI policy was more dovish than expected with the central bank recognising the risks associated with the rising infection cases in the county and continuing its support for growth through a number of measures including its commitment to keep liquidity in surplus and an extension of measures like the on-tap TLTRO. Fears of any pre-mature tightening either through rates or liquidity management by some sections of the market have been put to rest by RBI’s dovish tone today. The governor was for instance categorical that the changes in liquidity measures announced today does not constitute tightening."
"The focus of the policy was clearly on yield management and the announcement of the G-sec acquisition program (GSAP 1.0) is likely to stabilise and support long term yields. Although, the extension of tenures for the VRRR (variable rate reverse repo auctions) might lead to some hardening at the short-end of the curve. The upward revision of the inflation forecast by the RBI is justifiable given rising commodity prices, although we see further upside risks to the current forecast range. That said, inflation is unlikely to be an area of concern for the RBI for the coming months and growth is likely to remain the policy priority."
Quote by Veena Sivaramakrishnan, Partner, Shardul Amarchand Mangaldas & Co on RBI Policy
"Doubling the exposure that can be maintained with payment banks would enhance the role of payment banks. Recognising using the role of ARCs, a committee being set up to look at ARC reforms would be the much awaited change in near times, especially with the noise around NPA and role of ARCs continuing to rise. Membership to RTGS and NEFT being extended to PPI issuers, white label ATM, etc. is a welcome change in the times where such players have a significant role. ECB framework allowed parking of proceeds only for 1 year. Extending this by one more year for borrowers who faced deployment issues in COVID times would ensure access to capital for such borrowers for some more time. Recognising and strengthening the growth of GSec, the RBI has taken a bold step of introducing a structured secondary market for GSecs."
Riaz Maniyar, Co-founder, YieldAsset Real Estate Tech on RBI Policy
The decision by RBI to maintain the repo rate status quo will make sure that cost of borrowing will not harden soon. However, a further cut in the key rates would have given a boost to current demand uptick for real estate . The low-interest rates have started impacting the property markets in a positive way as maintaining low finance costs is critical for a sustainable recovery in the real estate sector and enhancing confidence in home buyers. A wave of spending by the government across sectors has also set the stage for years of high growth of the economy which will in-turn influence real estate too. While the government has taken some initiatives to uplift the sector in the past few months by introducing stress funds and stimulus packages, more reforms are required to propel the growth of real estate sector.
Quote by Deepthi Mathew, Economist at Geojit Financial Services on RBI Policy
"It was in the expected line as the MPC kept the rates unchanged. Though the governor assured of maintaining the accommodative stance as long as the economy recovers, he also cautioned about the factors that could push up prices. One of the highlights in today’s statement was the announcement of G-sec acquisition program 1.0, which the bond market needed the most. It could help in the cool off in bond yields and support the government’s market borrowing program"
Quote on RBI Monetary policy from Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services
"The monetary policy announcement is on expected lines without changes in policy rates and stance. However, reading between the lines, one can conclude that the stance is more dovish than expected with the governor reinforcing the central bank's commitment "to remain accommodative to support & nurture the recovery as long as necessary". The bond market has taken the announcement positively with the 10-year yield moving to 6.12%. The governor's assurance to ensure an orderly evolution of the yield curve also is confidence-inspiring"
RBI to buy Rs 1 lakh crore of G-Sec under GSAP in Q1
The Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday said that the secondary market G-Sec acquisition program for Rs 1 lakh crore will be put in place for Q1 of FY22, where the first purchase of Rs 25,000 crore will be done on April 15 under G-SAP. "RBI will commit to upfront buying of G-secs. It will ensure financial stability and G-sec stability from global uncertainty," Das said while keeping the repo rate unchanged at 4 percent.
RBI increases Centre's Ways and Means Advances by 46%
Reserve Bank will enhance the Ways and Means Advances (WMA) to Rs 47,010 crore, up 46 percent from the current limit of Rs 32,225 crore. WMAs are temporary advances given by the RBI to the government to tide over any mismatch in receipts and payments.
RBI Monetary Policy Live Updates: Manufacturing firms optimistic on demand picking up in FY22
RBI Monetary Policy Live Updates: Maximum end of day balance for payment banks doubled to Rs 2 lakh
RBI Monetary Policy Live Updates: RBI Guv says Asset Reconstruction Companies' potential is yet to be fully realised.
