Rbi

The Reserve Bank of India (RBI) has appointed Rajiv Ranjan and Sitikantha Pattanaik as executive directors (ED) with effect from May 1, 2022, the central bank said on May 13. Before being promoted as ED, Ranjan was the adviser-in-charge of the monetary policy department and also secretary to the monetary policy committee (MPC). He has more than three decades of experience in macroeconomic policy and research, including monetary policy, fiscal policy, real sector, external sector and international relations. Ranjan has worked in various departments of the RBI, including the monetary policy department, department of economic policy and research, department of external investments and operations and international department. He also served as the economic policy expert with the Central Bank of Oman for three years. As executive director, he will look after the monetary policy department (MPD). Close Ranjan, who has a PhD in economics from Mumbai University and a … [Read more...] about RBI appoints Rajiv Ranjan, Sitikantha Pattanaik as executive directors

Reserve Bank of India (RBI) governor Shaktikanta Das announced a 40-basis-point (bp) hike in the key lending rate and raised the cash reserve ratio (CRR) by 50 bps in an unscheduled announcement on May 4. This is the first such unscheduled statement from the RBI governor since the start of the pandemic in 2020. The announcement surprised the markets, pushing up bond yields and putting pressure on the equity indices. In an interview with Moneycontrol, Madan Sabnavis, chief economist, Bank of Baroda, shares his views on the RBI rate hike. Edited excerpts: Was the 40-bp rate hike a surprise? Yes, it was a surprise for two reasons. There was no official data point which had come since the last policy except the CPI (Consumer Price Index) inflation number which anyway was expected to be close to 7 percent. Second, the quantum of 40 bps appeared to be high considering that the market was expecting 25 bps at a time. Close Also Reads | Another 25 basis-point … [Read more...] about MC Interview | Bank of Baroda’s chief economist on why did RBI choose to hike rates off-policy

The unprecedented rise in retail inflation numbers over the last few months have left many in the government worried. The government is hoping that the stealth measures taken by the Reserve Bank of India (RBI) will do the job but if the price pressure persists, New Delhi is preparing to step in to ease supply constraints, according to sources in the finance ministry. “We don’t want the food inflation to go up further,” said one official. “This has to be seen as a monetary policy problem. We had a kind of expansionary monetary policy due to the Covid pandemic. But the government will have to take certain measures to curb inflation,” the official added. “Wherever support is needed to control inflation, we will provide it,” the ministry official said, adding that wherever the government sees inflationary pressure, necessary measures will be taken. The official requested anonymity. The unrest is visible in the corridors of North Block Close The April inflation … [Read more...] about India’s inflation heat: Soaring prices put pressure on government, RBI to act

Representative image. Indian government bond yields have risen steadily in recent days, with the benchmark 10-year yield spiking to a three-year high of 7.47 percent on May 9. Record debt supply, reversal of easy money policies both in India and the United States, coupled with elevated oil prices have exerted pressure on bond yields, which move in the opposite direction to prices. Bond yields are an indicator of where interest rates are headed in the economy and represent the cost of borrowing funds for the government. While announcing the federal budget for this financial year, the government in February, had pegged gross market borrowings at a record Rs 14.95 lakh crore, 44.2 percent higher than the preceding financial year. Since then, the Russian invasion of Ukraine, persistently high domestic inflation, the US Federal Reserve’s aggressive policy tightening, foreign debt flows and the recent out-of-turn rate hike by India’s Monetary Policy Committee … [Read more...] about Explained | How does RBI intervene in the bond market? 5 key points

Representative Image The criticism of the RBI’s rate-setting Monetary Policy Committee for opting an off-cycle repo rate hike is “unfair”, given the uncertainty around inflation in the country, Duvvuri Subbarao . a former governor of the Reserve Bank of India , has said. “By acting pre-emptively, the RBI hopes to keep inflation expectations anchored,” Subbarao said in an article he wrote for Moneycontrol on May 10. “The RBI must have also calculated that waiting out till June will be costly while an off-cycle action will give it more bang for the buck.” In an unscheduled announcement on May 4 , the MPC announced a 40-basis-point hike in the key lending repo rate and raised the cash reserve ratio (CRR) by 50 basis points. The move came in the backdrop of aggressive monetary tightening by the US Federal Reserve and the domestic retail inflation persistently staying above the central bank’s comfort zone. It was the first such unscheduled statement from the RBI … [Read more...] about RBI’s criticism for off-cycle MPC rate hike unfair, says former governor Subbarao

Former RBI governor Duvvuri Subbarao. The Reserve Bank of India (RBI) may have to explain its likely failure on meeting the inflation target to the government by September, Duvvuri Subbarao , a former governor of the central bank, has said. “Should the prospect of a letter arise again by September, the RBI must see that as an opportunity to explain the challenges of navigating extraordinarily uncertain times,” Subbarao said in an article published in Moneycontrol on May 10. The RBI targets inflation at 4 percent with a tolerance level of two percentage points on either side. According to the mandate, if average inflation stays above the target band for three consecutive quarters, the RBI has to write a letter to the government explaining the reasons for the failure to deliver inflation within the target band and the remedial action taken to get it back on target, Subbarao said in the article. When a similar contingency was on the anvil during the … [Read more...] about RBI may have to explain failure to meet inflation target by September, says former governor D Subbarao

RBI Governor Shaktikanta Das (File image: Reuters) The shortages and volatility in financial and commodity markets are becoming "more acute", and the "global economic recovery is losing pace", Reserve Bank of India (RBI) Governor Shaktikanta Das said on May 4, as he announced a surprise 40 basis points hike in repo rate . Crude oil prices "will continue to remain high" in the near future, Das said in his announcement, adding that food inflation is "also expected to continue". In order to contain the inflationary pressures, the Monetary Policy Committee (MPC) has unanimously voted to increase the repo rate to 4.40 percent, added Das. ALSO READ: RBI Policy: CRR hike can suck out Rs 83,711 crore liquidity, says Governor Das The panel has also revised the standing deposit facility (SDF) to 4.15 percent and marginal standing facility (MSF) to 4.65 percent, Das noted, further stating that "CPI inflation print for April is also expected to be elevated". Close … [Read more...] about Shortages, volatility in markets more acute; global economic recovery losing pace: RBI Guv

File image of RBI Governor Shaktikanta Das (Image: Reuters) The Reserve Bank of India (RBI) Governor Shaktikanta Das in a surprise move said on May 4 that the monetary policy committee (MPC) voted unanimously to increase the policy repo rate by 40 basis points (bps) to 4.40 percent with immediate effect. The central bank also increased the Cash Reserve Ratio (CRR) by 50 basis points to 4.50 percent.  "CRR hike can suck out liquidity to the tune of Rs 83,711.55 crore from the banking sector," Das said. CRR is a percentage of a bank's total deposits that it needs to maintain as liquid cash. The CRR hike will be effective from May 21. One basis point is one-hundredth of a percentage point. The unscheduled statement comes on the day the Federal Reserve is to share the outcome of its policy meeting in which it is expected to raise rates by 50 basis points. Close This is the first-rate hike since August 2018 and the first instance of the MPC making an … [Read more...] about RBI Policy: CRR hike can suck out Rs 83,711 crore liquidity, says Governor Das

Reserve Bank of India Milind Muchhala, Executive Director, Julius Baer India, says the RBI seems to be behind the curve, especially in the current environment of rising inflationary pressures and various global central banks adopting a tightening stance. Julius Baer expects the RBI's stance to turn hawkish in the upcoming policy meet (February 8-10). On investments, he said: “We think it is a good time to focus on the infrastructure, construction, capital goods, banks and realty sectors. We have been positive on domestic cyclicals and the plays on revival of the domestic investment cycle for some time now.” Muchhala has over 20 years of experience in the industry, including in equity research, advisory and wealth management. We are nearing the end of December quarter earnings season . How do you read quarterly earnings announced so far? The Q3FY22 earnings season, at least until now, has been quite in line with expectations. While the season began on a decent note … [Read more...] about Daily Voice | RBI seems behind the curve, expect monetary policy to turn hawkish, says Milind Muchhala of Julius Baer India

The Reserve Bank of India (RBI) on May 17 said it has found six applicants not suitable for permits of small finance bank licences and universal bank licences after an examination. Those found not suitable for universal bank permits are UAE Exchange and Financial Services Limited, The Repatriates Cooperative Finance and Development Bank Limited (REPCO Bank), Chaitanya India Fin Credit Private Limited, and Shri Pankaj Vaish, and others. The applicants not found suitable for SFB permits are VSoft Technologies Private Limited and Calicut City Service Co-operative Bank Limited. The remaining applications are under examination, the RBI said. The RBI had received 11 applications to set up bank under the guidelines for ‘on tap’ licensing of universal banks and small finance banks. Close The examination of six applications has now been completed, the central bank said, adding six applicants were not found suitable for granting of in-principle approval to set up banks. … [Read more...] about RBI says six applicants found not suitable for bank permits