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RBI Monetary Policy LIVE Updates | Zarin Daruwala, Cluster CEO, India and South Asia markets Standard Chartered Bank, said, “As expected, the MPC continued with its accommodative stance and clearly indicated its intent to remain supportive of growth as long as was required. The deferral of the Marginal standing facility and Net stable funding ratio measures will provide a fillip to economic growth and monetary transmission. Moreover, by becoming one of the few economies in the world to provide retail investors a direct avenue to invest in government securities, the RBI has both opened up a new retail savings avenue and a potentially large source of diversification for the government’s borrowing plans. Introduction of lending to new MSME customers without statutory requirements as well as extension of the targeted long-term repo operations window for NBFCs will improve credit delivery to these segments, with the relief on the capital conservation buffer providing balance sheet room to banks.”
Coming soon: Retail investors can directly invest in government securities with RBI
Investing in government securities is set to become easier. In the Reserve Bank of India’s (RBI) monetary policy announcement made earlier today, the RBI Governor Shaktikanta Das said that retail investors will be given online access to the government securities market – both primary and secondary- along with the facility to open their gilt securities accounts –with the RBI. This facility will be called Retail Direct. The details of the facility will be announced later. This is not the first time that the RBI has encouraged retail investors to invest in g-secs. So far, there has been a lukewarm response. But experts predict that the latest move ought to bring in more retail investors in the g-secs market. Here’s what you should know about RBI’s latest move and how it can benefit you. READ MORE HERE
RBI Monetary Policy LIVE Updates | Vikash Agarwal, President, Indian Chamber of Commerce said, “ICC is all praise for a pragmatic policy from RBI in balancing growth with inflation. While keeping repo rates unchanged clearly gives an indication to industry cost of funds would remain low, giving a direction that CRR would rise from 3% to 4% in phases is a superb move. It would restore the CRR rate of 4% from 2013 to 2020 and at the same time make available more cheap funds to Government to fund the Fiscal Deficit and raise Aggregate Demand without raising Inflation.
ICC also feels that RBI has taken a revolutionary step by providing retail investors a direct avenue to invest in Government securities, from a longer-term perspective. ICC further feels that today’s announcement by RBI is reassuring and comforting for Industry after a bold and growth oriented Union Budget.”
RBI Monetary Policy LIVE Updates | Rohit Poddar, MD, Poddar Housing said, “RBI has maintained its accommodative stance not only for rates but also for taking the liquidity infusion related measures. H2 of 2020 has been one of the best periods for real estate considering the growth that has been achieved, the decision to keep the rates unchanged will further help in continuing the momentum.
The GDP growth is expected at 10.5% which showcases that India is advancing towards a more normalized environment. Despite larger than anticipated deflation in vegetable prices in December, the increase in commodity prices globally is likely to keep the core inflation elevated. The rising commodity prices (like crude oil) globally is likely to influence inflation to move in high trajectory. Incentivizing new MSME loans would help banks in expanding their lending cap for the sector. The policy makers in India are taking decisions which is in the best interest of the country’s economic revival.”
RBI Monetary Policy LIVE Updates | Tirthankar Datta, Partner, J Sagar Associates said, “The announcement by the RBI Governor on inclusion of NBFCs in the on tap Targeted Long Term Repo (TLTRO) Scheme of the Government will be a much needed fillip for the NBFC sector after it had been reeling from a liquidity crunch since the IL&FS default in 2018 which was exacerbated by the pandemic. This is a great growth oriented and stabilising measure and in line with the NBFC sector’s demands, instead of trying to stem the liquidity to address inflation concerns.”
RBI Monetary Policy LIVE Updates | Umesh Revankar, MD and CEO, Shriram Transport Finance said, “The monetary policy was along expected lines with status quo on rates and reiteration of accommodative stance for as long as necessary. This clearly shows that the central bank is comfortable with inflation levels and is giving priority to pro-growth measures. The fact that on tap TLTROs have been opened up for NBFCS shows the crucial role they play in the Indian financial system to drive sustainable and durable economic recovery and growth from here on. Also the credit enhancement and growth announced for the MSMEs shows the acknowledgment by the central bank of the problems that the MSME sector is experiencing and has shown clear intention to address them with these measures.”
RBI Monetary Policy LIVE Updates | Sujata Guhathakurta, President & Business Head, Debt Capital Markets-Sales, Kotak Mahindra Bank said, “It has been a very eventful week for the markets, first the Budget and then the RBI policy. There has been a lot of positives from the RBI policy on the economy, growth, CPI, liquidity, accommodative stance and repeated assurance on maintaining stability in markets. But, bond markets are disappointed as there was an expectation for some decisive action like a OMO calendar to take away the shock of the additional Rs 80,000 crore borrowing in the last two months of the fiscal. From the day of the budgets to today, the 10 year G-Sec in a week has jumped 25 basis points from 5.90% to 6.15%. Having said that I am confident that RBI will manage the large borrowing programme well and navigate the market efficiently like they did last year.”
RBI monetary policy | Unchanged rates good for homebuyers, real estate sector
The Reserve Bank of India (RBI), as expected, on February 5, left interest rates unchanged, while continuing with an “accommodative” stance, a move that will help homebuyers as well as the real estate sector.
Unchanged rates mean that home loans won’t get expensive and buyers can continue to take advantage of the prevailing low rates, which will also sustain housing demand, experts said.
“The status quo on the policy rates is a welcome step for the homebuyers as they can take advantage of the prevailing lowest mortgage rates,” said Samantak Das, Chief Economist and Head of Research, JLL India. READ MORE HERE
RBI Monetary Policy LIVE Updates | Sidharth Rath, MD & CEO, SBM Bank India said, “The mention of ‘financial stability and orderly evolution of yield curve are public goods’ hints comfort for orderly movement of yield curve in line with other macro-economic variables. Though the Governor has mentioned stable near-term outlook on inflation, there is an implicit caution in terms of acknowledging the escalation in cost push pressure and rise in global commodity prices.
The Governor solicited continuation of common understanding and cooperative approach between Market players and RBI to continue in Fiscal year 2022, which is a hint to the market participants not to act in a haste and also indicating the regulatory support to maintain orderly market conditions.
The decision to provide retail investors with online access to the G-Sec market is a positive step towards further deepening the bond market and building an alternative asset class.”
RBI Monetary Policy LIVE Updates | Dinesh Khara, Chairman, SBI said, “The RBI policy announcement today is an acknowledgment and continuation of doing whatever it takes to maintain an orderly, seamless and non-disruptive liquidity management policy to support debt management. Towards this end, an extension of enhanced HTM limit, relaxation of funds availability under MSF, an extension of on tap TLTRO to NBFC, deduction of credit disbursed to ‘New MSME borrowers’ from their NDTL for calculation of the CRR will calibrate credit flow and liquidity management. Allowing retail participation in the G-Sec market is a bold step towards the financialization of a vast pool of domestic savings and could be a game-changer. Furthermore, deferment of the implementation of the last tranche of Capital Conservation Buffer and the Net Stable Funding Ratio by another six months is a well-intentioned move which is crucial for banks, especially the not so strong ones to stay afloat in the current environment. Overall, a thoughtful policy and a thoughtful budget could just be the ideal mix for rejuvenating growth in the current pandemic.”
RBI Monetary Policy LIVE Updates | Chandra Shekhar Ghosh, Managing Director & Chief Executive Officer, Bandhan Bank said, “The RBI’s plan for reviewing the regulatory framework for microfinance is a most welcome step.
The Malegam committee on microfinance, about ten years back, played a huge role in strengthening the foundations of the Indian microfinance industry with setting up of policy contours around a host of areas including lending process, pricing of interest rates, increasing transparency, capital and provisioning norms, and reducing the problems of multiple lending and over borrowing.
Since then, the industry has significantly consolidated its position with strong last mile credit delivery and helping income generation and employment at the bottom-end of the pyramid.
Since over a decade has passed since the Malegam committee, a fresh and comprehensive review of the sector will certainly be a timely and relevant initiative towards harmonizing the regulatory framework for the industry for various kinds of entities that can be followed uniformly across the country. This will put the industry in a position of further strength to help millions of poor Indian households with better risk mitigation and stronger financial inclusion.”