RBI Monetary Policy Updates: Efforts on to ensure another large NBFC does not default, says governor Shaktikanta Das

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RBI Monetary Policy Updates: Efforts on to ensure another large NBFC does not default, says governor Shaktikanta Das
  • 12:02 (IST)

    Follow Fourth Bi-Monthly Monetary Policy Press Conference by RBI governor Shaktikanta Das here: 

  • 15:32 (IST)

    RBI rate cut a good move: Motilal Oswal

    The RBI's repo rates by 25 bps to 5.15 percent is a very good level of indicative rates, said Motilal Oswal, Managing Director, Motilal Oswal Financial Services.

    "The issue is the transmission of these rates in the system. RBI has been asking the banking system to offer loans at a level that reflects the benchmark cut, but the system is reluctant to pass on, due to risk aversion. Equity markets are cautious and watchful about the earnings season which at this juncture looks less enthusiastic,” said Oswal.

  • 15:12 (IST)

    'Rate cut will infuse much-needed liquidity in system'
     

    Given the current economic scenario, 25 bps cut is in line with India Inc expectations, Umesh Revankar, MD and CEO - Shriram Transport Finance.

    "This rate cut would infuse the much-needed liquidity into the system which will support investments and improve the overall financial health of the economy,” h said.

  • 15:10 (IST)

    'There is room for further cuts'


    "In line with our expectation, the MPC has cut rates by 25 bps. It retained the stance at ‘accommodative’ indicating there is room for further rate cuts. We are expecting one more rate cut, albeit of smaller magnitude (15 bps) later in the fiscal year," said Anagha Deodhar, ICICI Securities.

  • 14:33 (IST)

    'RBI rate cut in sync with market sentiment' 

    The 25 bps rate cut is definitely a welcome move showing the alignment of monetary and fiscal policy initiatives in the backdrop of a downward revision in the GDP growth to 6.1 percent for FY20, said Ramesh Nair, CEO, India JLL.

    "The rate cut of 25 bps delivered by the RBI in its fourth bi-monthly monetary policy meeting is in line with the market expectations. This move is in sync with the government’s efforts to accelerate economic activity," he said.

  • 14:25 (IST)

    'Rate cut will give major boost to retail sector'
     

    The RBI's move will be welcomed by the consumers, especially during the festive season. This could give a major boost to the retail sector, said Anuj Kacker, co-founder and COO, MoneyTap.

  • 14:22 (IST)

    Expect more rate cuts from RBI
     

    A rate cut by another 35 to 60 bps is expected by the end of the current easing cycle given the stable inflation and soft global growth, said Jyoti Roy, DVP Equity Strategist, Angel Broking.

    "However we believe that more than rate cuts transmission of rate cuts is more important now given that spread between the repo rate and the 10 year G sec at over 150 bps is too high, especially considering the accommodative stance of the RBI and surplus liquidity in the system," he said.

  • 14:20 (IST)

    Sensex down more than 250 points

  • 14:20 (IST)

    'Repo rate cut good for growth'
     

    The sustained accommodative stance of the RBI is good for growth, especially for the residential real estate sector, said Kamal Khetan, chairman and managing director, Sunteck Realty.

    "Clearly, benign inflation has given greater scope for the bank to go for a revival of the economy. We hope that banks will now accelerate the transmission of the RBI rate cuts to the common man to improve the demand and consumption across all sectors," he said.

  • 14:18 (IST)

    'Positive step to allay fears'
     

    The fifth straight cut since February 2019 is a positive step to allay fears of a slow down, feed real economy and boost domestic demand, specifically household consumptions, said Mahendra Agrawal, director IndiaMoneyMart.

    "The interest rate is falling, investors are likely to give the first prerogative to returns instead of risk. This will further boost the flight of capital in hybrid fixed income asset classes such as P2P lending or long term debt mutual funds," he said.

  • 14:16 (IST)

    Announcement in line with objective to revive economy

    The RBI repo rate cut announcement is in line with the objective to revive the economy, said Rajesh Sharma, managing director, Capri Global Capital.

    "Whilst liquidity concerns are almost taken care of by the central bank for NBFC, the continuous cut in the repo rate provides more monetary stimulus," he said.

  • 14:14 (IST)

    'RBI rate cut will revive economic growth'
     

    India’s Monetary Policy Committee’s continued its ‘accommodative’ stance for the fifth consecutive time this year by reducing repo rate by 25 bps, said Niranjan Hiranandani, national president, NAREDCO and senior VP- Assocham.

    The paring of repo rate is a move inclined to revive economic growth, ensuring inflation remains muted and spur up the consumption and investment, he said. 

  • 14:09 (IST)

    Repo rate cut to benefit real estate sector, say realty firms

    The RBI's repo rate cut by 25, basis points right ahead of the festive season will certainly benefit the real estate sector further in a holistic way, said Hakim Lakdawala, Promoter, Goodwill Developers.

    It will provide a boost to sales within the market increasing the demand for affordable housing by regulating the housing finance sector at large, he said.

    "We look forward to the pragmatic outcome of this announcement," said Lakdawala. 

  • 14:08 (IST)

    More needed to stimulate demand

    In light of the ongoing economic distress in the country, the 25 basis points cut in policy rate is short of expectation, said Shishir Baijal, CMD, Knight Frank India.

    "While it is the fifth consecutive rate cut this year, it is insufficient to support the flagging consumer demand. The stressed real estate sector was looking up to a strong rate cut and sector-specific lending provisions to improve both liquidity scenario and consumer spending ability," he said.

  • 14:02 (IST)

    Rate cut to improve consumer sentiments ahead of festive season

    "A straight fifth repo rate cut of 25 bps will quicken the pace on both private consumption and private capital expenditure, paving the way for the growth of the country's GDP, said Farshid Cooper, MD, Spenta Corporation.

    "The majority of the real estate purchase is done with the financial assistance of bank loans, and hence, a rate cut, ahead of Diwali, will surely help in boosting the sales of homes, with interest rates on home loans becoming cheaper," he said. 

  • 13:59 (IST)

    Repo rate in line with expectations

    The repo rate cut of 25 bps to 5.15% announced today is in line with expectations, said Anuj Puri, Anarock Consultants.

    "It can probably go some way in improving consumer sentiments ahead of the festive season, which is a crucial quarter for real estate sales.  However, much depends on how efficiently banks transmit the benefits to their homebuyers," he said.

  • 13:57 (IST)

    'Rate cut expected to complement other fiscal measures'
     

    The rate cut is expected to complement other fiscal measures such as the corporate tax rate cut that was announced last month to propel GDP growth, said Anshuman Magazine, chairman & CEO, India, South East Asia, Middle East & Africa, CBRE. 

    "The timing of the cut is crucial as it is expected to spur real estate demand and consumption ahead of the festive season as it is an important period for investment/ consumption across sectors," he said.

  • 13:54 (IST)

    Rupee weakens further, trades near day's low

  • 13:53 (IST)

    'There may be further cuts in light of GDP growth forecast'

    The RBI has once again proved to be well ahead of the curve in unleashing monetary efficacies to combat the economic slowdown, in perfectly complementing the fiscal initiatives, said K Joseph Thomas, head research - Emkay Wealth Management.

    "There may be further cuts in the rate in the light of the GDP growth forecast being lowered from 6.90 percent to 6.10 percent% for FY 20. We need to see more action from the government for a consumption-led recovery,” he said.

  • 13:50 (IST)

    Repo rate cut to boost CAPEX
     

    The MPC has delivered the fifth straight rate cut with an aim to support the government’s actions to boost the CAPEX in the economy amid benign inflation, said Rohit Poddar, managing director, Poddar Housing and Development and joint secretary, NAREDCO Maharashtra.

    "Recently the concerns over the stability of the financial sector have taken center stage. The rate cut of 25 bps with an accommodative stance is expected to ascertain the lower lending rates in a bid to encourage economic activity across the sectors," he said.

  • 13:47 (IST)

    RBI retains dovish stance
     

    "The policy reiterated the ‘accommodative stance’, while emphasising that the easy monetary policy would continue for “as long as was necessary to revive growth,” said Kumaresh Ramakrishnan, CIO-Fixed Income, PGIM India Mutual Fund.

    RBI slashed the FY 20 GDP target from 6.9 percent to 6.1 percent. Signaling that policy cuts were not over, the policy referred to “adequate monetary space still being available to address the growth needs”, he said.

  • 13:44 (IST)

    'RBI cognizant of waning domestic demand'

    The latest series of cuts by Governor Das and the MPC indicates that the RBI is cognizant of the waning domestic demand and merchandise exports in recent months, said Pushkar Mukewar, co-founder & co-CEO, Drip Capital, a US-based trade finance company.

    "The downward revision of the GDP estimates to 6.1 percent is worrisome, and one hopes that these cuts are the right solution," he said.

  • 13:42 (IST)

    RBI pumps liquidity into banking system
     

    "With an overall cut of 135 bps in 2019, the RBI has pumped a lot of liquidity into the banking system which should make a clear pledge to keep the banking system glow with liquidity," said Ashok Mohanani, chairman, EKTA World, vice president, NAREDCO Maharashtra.

  • 13:39 (IST)

    'Conventional rate cut, expected deeper cut'
     

    The MPC policy delivered the conventional 25 bps policy rate cut as against expectations of a tad deeper cuts, said Madhavi Arora, economist, Fx & Rates, Edelweiss Securities.

    "However, the tone of the policy was comfortably dovish as the policymakers stated that MPC would continue with an accommodative stance as long as it is necessary to revive growth, Arora said.

  • 13:37 (IST)

    'Repo rate cut will enliven consumer sentiments'
     

    With a continuous effort of reviving the growth of the industry, the recent announcement of the RBI rate cut will enliven the consumer sentiments towards investment and consumption, said Rahul Grover, CEO, SECCPL.

    "With the onset of the festive season, the RBI has ensured a much-needed brief rest to the stressed real estate sector," he said.

  • 13:34 (IST)

    Repo rate cut in line with industry expectations

    The RBI's decision to cut the repo rate for the fifth consecutive time this year by 0.25 percent to 5.15 percent is in line with industry expectations and shows its decision to maintain an accommodative stance, said Mani Rangarajan, group chief operating officer- Housing.com, Proptiger.com, Makaan.com and FastFox.com.

    "While this rate cut would bring down the borrowing costs for home and auto loans since the RBI has mandated banks to link their retail loans like home, auto, to the external benchmarks like repo rates," he said.

  • 13:32 (IST)

    Good announcement before festival season 

    "With the festive season is around the corner, we definitely welcome this move as people make huge purchases during Navratras and Diwali. The real estate sector has been looking forward to such initiatives to boost sales as it is highly sensitive to interest rate movements. This reduction of repo rate will not only bring down the lending rates but also incentivise investment and boost consumption," said Surendra Hiranandani.

  • 13:29 (IST)

    'Easing monetary stand welcome move to make economy buoyant'

    "RBI cognizance to the fragile state is reiterated with its announcement of 25 bps cut in the repo rate to 5.15 percent continuing the downward revision for the fifth time. This easing monetary stand is a welcome move to make the economy more buoyant and for return of domestic consumer spending," said Parth Mehta, managing director, Paradigm Realty. 

  • 13:26 (IST)

    GDP outlook for 2019-20 revised to 6.1%

  • 13:19 (IST)

    'Repo rate cut meets expectations'
     

    The 25 bps cut in repo rate by the RBI meets the market expectations and still manages to trim down expectations of deeper cuts ahead, said Rajni Thakur, economist, RBL Bank. 

    "In the current growth inflation dynamics, accommodative stance is warranted as it is. However, upwards inflation projections clearly indicate limited space to cut rates further to support growth," said Thakur.

  • 13:15 (IST)

    'RBI response is measured'

    "We believe the RBI response is measured and it has enough space to cut rates further in the event the growth doesn't pick up. The accommodative stance should keep the environment benign to help businesses get back on the growth track," said Prabhakar Kudva, director, Samvitti Capital.

  • 13:14 (IST)

    'Tone seems tilted towards softening bias'

    The MPC also remained committed to maintaining accommodative stance that aids growth-revival to the extent needed, said Lakshmi Iyer, chief investment officer (debt) & head products, Kotak Mahindra Asset Management Company.

    "The tone seems tilted towards a softening bias. With the intent to maintain adequate liquidity in the banking system, bond yields could remain well-anchored. This is conducive especially for short end of the yield curve. Global factors will assume centre stage now, which will determine near term movements in the yield," Iyer said.

  • 13:12 (IST)

    Corporate India expects yet another rate cut this year

    Corporate India expects more rate cut from the RBI before the end of the year.

    The Reserve Bank of India (RBI) on Friday cut interest rates for a fifth straight meeting this year, stepping up its efforts to kickstart an economy growing at its slowest pace in six years.
     

  • 13:10 (IST)

    'Further loosening in near term given accomodative stance'
     

    "The official policy stance remains accommodative, suggesting that further loosening will follow in the near term. We are pencilling in another 25 bps cut in December," said Shiilan Shah, senior economist, Capital Economics, Singapore, said. 

  • 13:04 (IST)

    Efforts on to ensure another large NBFC does not default: Shaktikanta Das

  • 13:02 (IST)

    'Rate cut in line with market consensus' 

    "The cut was in line with market consensus, and we wouldn’t have been surprised if the magnitude of the cut was slightly higher. We continue to see inflation well-anchored. This will offer the central bank more room for easing going ahead," said Siddhartha Sanyal, chief economist and head of research, Bandhan Bank, Kolkata.

    He said that it was expected that some more transmission of rate cuts to borrowers would happen given that the cumulative reduction in repo rate is now 135 basis points during 2019.

  • 13:00 (IST)

    India Inc reacts to RBI's repo rate cut

    Corporate India expects more rate cut from the RBI before the end of the year.

    The Reserve Bank of India (RBI) on Friday cut interest rates for a fifth straight meeting this year, stepping up its efforts to kickstart an economy growing at its slowest pace in six years.

  • 12:55 (IST)

    Press conference of RBI governor Shaktikanta Das concludes

  • 12:53 (IST)

    Highlights of RBI's fourth MPC statement

    It is the fifth-rate cut in 2019;

    GDP growth forecast lowered for current fiscal to 6.1 percent from 6.9 percent earlier;

    RBI continues with its accommodative monetary stance to revive economic growth;

    Government stimulus measures to help strengthen private consumption and spur investments;

    Continuing slowdown warrants intensified efforts to restore growth momentum;

    Retains retail inflation projection for second half of year at 3.5-3.7 percent;

    RBI notes monetary transmission has been staggered and incomplete;

    Foreign exchange reserves stood at $434.6 bn on 1 October, up $21.7 bn over March-end 2019;

    Next monetary policy review meet scheduled during 3-5 December, 2019.

  • 12:51 (IST)

    Market turns negative

  • 12:50 (IST)

    'Will take up changes required in regulatory framework for co-operative banks'

  • 12:49 (IST)

    RBI slashed repo rates by 135 bps till now: Shaktikanta Das

    Shaktikanta Das said that the RBI has cut the repo rate by 135 basis points so far this year. 

    "Today's 25 bps rate cut should be seen in the backdrop of the 110 bps cut already done this year," said the RBI Governor.

  • 12:46 (IST)

    Global financial markets have remained unsettled, says RBI governor

  • 12:44 (IST)

    'Will have a fresh look at regulatory framework'

    "Every such incident (like the PMC Bank case) is an experience and we will have a fresh look at the regulatory framework (for cooperative banks)," said the RBI governor.

    He said that if any change is needed, the RBI talk to the government. 

  • 12:39 (IST)

    Corporate tax rate cut is positive for economy: Shaktikanta Das

  • 12:38 (IST)

    'External benchmark requirement introduced for better transmission'

    External benchmark requirement has been introduced for better transmission, said the RBI governor. 

    He said that the government announced a slew of measures including corporate tax rate cut to revive the economy.

  • 12:36 (IST)

    Market recovers from earlier lows

  • 12:35 (IST)

    Acted swifty in case of PMC bank issue: RBI governor

    As soon as the PMC Bank issue came to RBI notice, the banking regulator has acted swiftly said RBI governor Shaktikanta Das.

    He added that one incident should not be used to generalise the cooperative banking system.

  • 12:34 (IST)

    'Will continue with accommodative stance'

    RBI governor Shaktikanta Das says that the central bank will continue with an accommodative stance as long as it is necessary to revive growth. The RBI governor has refused to comment on the minimum acceptable rate on the repo rate.

  • 12:33 (IST)

    Rupee, bond prices fall after RBI cuts repo rate by 25 bps

    The rupee and bond prices fell after the monetary policy committee of the Reserve Bank of India cut repo rates by 25 basis points to 5.15 percent today.

RBI MPC LATEST Updates: RBI governor Shaktikanta Das has said that efforts are on to ensure that another large non-banking finance company (NBFC) does not default.

"We continue to monitor the PMC Bank situation, keeping in mind the interest of the depositors," he said.

Das said that as soon as the PMC Bank issue came to RBI notice, the banking regulator acted swiftly. He added, one incident should not be used to generalise the cooperative banking system, says Shaktikanta Das.

The RBI governor said that the Indian banking sector remains sound and stable.

Das said that he is not aware of any demand by the government for an interim dividend of Rs 30,000 crore from RBI.

Shaktikanta Das has said that the overall liquidity remained surplus in August and September 2019 despite the expansion of currency in circulation and forex operations by RBI draining liquidity from the system.

Global economy has lost further momentum, says RBI governor.

 RBI Monetary Policy Updates: Efforts on to ensure another large NBFC does not default, says governor Shaktikanta Das

File image of RBI governor Shaktikanta Das. News18

RBI said that its September 2019 round of inflation expectations survey indicates that households expect inflation to rise by 40 basis points over a 3-month ahead horizon and 20 basis points over a one-year ahead horizon.

RBI governor Shaktikanta Das has already hinted that benign inflation provides room for further monetary policy easing while space for fiscal space is limited.

The RBI is predicted to lower its key lending rate or the repo rate by 25 basis points (bps) to 5.15 percent, which would take cumulative cuts so far this year to 135 bps.

Most analysts forecast one more cut of 15 bps in December this year.

The government has announced a series of measures including steepest cut in corporate tax, rollback of enhanced surcharge on Foreign Portfolio Investors, among others to jump-start growth which hit a six-year low of 5 percent during the first quarter of the current fiscal.

The six-member MPC is scheduled to announce the fourth bi-monthly monetary policy for 2019-20 on Friday, after a three-day meeting.

There was no meeting of the panel on 2 October on account of Gandhi Jayanti.

The central bank has already slashed repo rate four times consecutively this year amounting to 110 basis points in aggregate.

At its last meeting in August, the Monetary Policy Committee (MPC) reduced the benchmark lending rate by an unusual 35 basis points to 5.40 percent.

The upcoming MPC meeting comes in the backdrop of RBI's mandate to banks to link their loan products to an external benchmark, like repo rate, for faster transmission of reduction in policy rates to borrowers, from 1 October.

Ahead of the meeting, the Das-headed Financial Stability and Development Council (FSDC) sub-committee took stock of the prevailing macroeconomic situation.

Earlier, the RBI governor had said that the government has little fiscal space, giving hope that the central bank may provide more monetary stimulus to prop up the economy.

The government's fiscal space has been squeezed on account of cut in rates of corporate tax as well as lowering of GST rate on various goods. Revenue collection too has been below the Budget estimates.

Experts are of the opinion that another rate cut is on the cards as the government's hands are tied and the onus of taking initiatives now rests with the central bank.

Shanti Ekambaram, president, Consumer Banking, Kotak Mahindra Bank, said with inflation still within the RBI's medium-term target of 4 percent, the MPC has the headroom to cut the repo rate further.

"However, the recent volatility in crude oil prices and the fiscal measures announced by the government will have an impact on inflation in the medium term and the fiscal deficit. Hence, we expect the MPC to be more measured in its response with a rate cut of 20-25 basis points in the October policy," she said.

"We continue to expect the RBI MPC to follow RBI Governor into another 'out-of-the-box' 35 basis points repo rate cut on 4 October. This should send a strong signal for bank lending rate cuts with the 'busy' industrial season round the corner," BofA Merrill Lynch said in a report.

According to NAREDCO president Niranjan Hiranandani, there is an expectation of a further 50 basis points repo rate cut in the backdrop of muted inflation which stands lower than the expected 3.2 percent.

The further reduction of repo rate will not only bring down the lending rates but also incentivise investment and boost consumption, he said.

While economic activities are showing signs of sluggishness, the policymakers are drawing solace from the fact that retail inflation remains in the comfort zone of the central bank.

Retail inflation inched up to 3.21 percent in August but remained within the RBI's comfort zone.

The RBI has been mandated by the government to ensure that inflation remains below 4 percent, with deviation of 2 percent on either side.

Experts and industry feel low inflation provides enough headroom for the RBI to further lower the policy rate, especially when festive season has just started. People make huge purchases during Navratras and Diwali.

With liquidity concerns in the NBFC sector almost taken care of, the real estate sector too is hopeful that the RBI will go in for the much-needed rate cut to boost demand for affordable housing.

With inputs from agencies

Updated Date: Oct 04, 2019 15:32:52 IST