Tag: rbi

RBI holds repo rate at 6.5%, inflation focus continues; FY24 GDP forecast unchanged at 6.5%

MPC voted to remain focused on withdrawal of accommodation by 5 votes to 1, said RBI’s Shaktikanta Das while announcing the committee’s decision. FY24 inflation projection unchanged at 5.4 percent.

RBI's Shaktikanta Das
The next RBI policy meet is scheduled for December 6-8.

The Reserve Bank of India’s Monetary Policy Committee (MPC), as expected, left the repo rate, the rate at which the central bank lends short-term funds to banks, unchanged at 6.5 percent on October 6.

“MPC voted unanimously to leave the repo rate unchanged at 6.5 percent,” Das said while announcing MPC’s decision.
The central bank also announced that it was was withdrawing its incremental cash reserve ratio (ICRR), which was introduced in August to withdraw surplus liquidity from the system in a phased manner.

Further, the MPC also decided that Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) rates are also left unchanged at 6.25 percent and 6.75 percent, respectively.

Das also “emphatically” re-iterated that MPC’s inflation target is 4 percent and not 2 to 6 percent. “Our aim is to align the inflation target to a durable basis, while supporting growth.”

“Global headline inflation is easing but rules above the target of many major economies. Sovereign bond yields have firmed up, US dollar has appreciated, and equity markets have corrected,” Das said in the press conference, adding that India is poised to become the new growth engine of the world.

On GDP growth, the MPC’s forecast for 2023-24 was left unchanged at 6.5 percent.

The overall tone of the bi-monthly monetary policy remained tilted towards the inflation fight. In the October MPC decision, Das said that CPI inflation forecast for 2023-24 left unchanged at 5.4 percent.

Das also mentioned that throughout the third quarter, food inflation pressure may not see sustained easing, while core CPI eased 140 basis points from its earlier peak in January.

The retail inflation fell to 6.83 percent in August as vegetable prices cooled compared to the previous month but it was still above the RBI’s tolerance band of 2-6 percent.

At 6.83 percent, the Consumer Price Index (CPI) inflation print was 61 basis points lower than July’s 15-month high of 7.44 percent. It was also the 47th month in a row that it stayed above the central bank’s medium-term target of 4 percent.

Most economists who had participated in a Moneycontrol poll early this week predicted a pause in the RBI policy. To counter inflation, the MPC has raised rates by 250 basis points (bps) since May 2022 but has kept the rates unchanged since the February review.

Source: https://www.moneycontrol.com/news/business/rbi-holds-repo-rate-at-6-5-inflation-focus-continues-11476261.html

RBI extends deadline to return Rs 2,000 notes at bank branches till October 7

Moneycontrol had on September 29 exclusively reported that the RBI is likely to extend the deadline for public for returning Rs 2000 notes to facilitate remaining bank customers deposit or exchange the denomination

RBI

The Reserve Bank of India (RBI) on September 30 extended the deadline for public to exchange or deposit Rs 2000 notes at bank branches till 7 October following a review.

“As the period specified for the withdrawal process has come to an end, and based on a review, it has been decided to extend the current arrangement for deposit / exchange of Rs 2000 banknotes until October 07, 2023,” the RBI said in a press release.

Subsequently, public can deposit or exchange of Rs2000 banknotes at bank branches till October 07, 2023, the RBI said. The central bank said Rs 2000 banknotes will continue to be legal tender.

On September 29, Moneycontrol exclusively reported that the RBI is likely to extend the deadline for public for returning Rs2000 notes to facilitate remaining bank customers deposit or exchange Rs2000 notes. The original deadline for returning Rs2000 notes was set to expire on September 30.

What happens after October 7?

According to the RBI, even after October 7, customers can continue exchange these notes at the 19 RBI Issue offices up to a limit of Rs20,000 at a time. Also, individuals and entities can tender Rs2000 banknotes at the 19 RBI issue offices for credit to their bank accounts in India for any amount, the RBI added.

Further, customers from within the country can also send Rs2000 banknotes through India Post, addressed to any of the 19 RBI Issue Offices for credit to their bank accounts in India, the RBI added.

“Such exchange or credit shall be subject to relevant RBI / Government regulations, submission of valid identity documents and due diligence as deemed fit by RBI,” the RBI said. The facility for deposit or exchange of Rs 2000 banknotes at the 19 RBI Issue Offices shall be available until further advice, the RBI added.

Source : https://www.moneycontrol.com/news/business/rbi-extends-deadline-for-exchange-deposit-of-rs-2000-notes-till-october-7-11456661.html

 

RBI asks banks, NBFCs to release original movable, unmovable property documents within 30 days of full repayment of loan

Lenders to be penalised ₹5,000 per day in case of delay on their part.

As per the latest RBI’s directive, the borrower will be given the option of collecting the original movable / immovable property documents either from the branch where the loan account was serviced or from any other office of the RE where the documents are available.

The Reserve Bank of India (RBI) has issued directions to Regulated Entities (REs) such as banks and non-banking finance companies (NBFCs) to release all the original movable / immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment/ settlement of the loan account.

This instruction has come as per the guidelines on Fair Practices Code issued to various REs since 2003, who are required to release all movable / immovable property documents upon receiving full repayment and closure of loan account.

Source: https://www.thehindu.com/business/rbi-asks-banks-nbfcs-to-release-original-movable-unmovable-property-documents-within-30-days-of-full-repayment-of-loan/article67301975.ece

RBI To Launch Digital Rupee Pilot In Call Money Market By October; Check Full List Of Banks Selected

The pilot project for the wholesale CBDC, known as the Digital Rupee-Wholesale (e-W), was launched on November 1, 2022.

The new pilot project will expand the use case of the CBDC to include transactions in the call money market. (Image: Zee Business)

The Reserve Bank of India (RBI) is planning to launch a pilot project for its Central Bank Digital Currency (CBDC) in the call money market by October. The call money market is a short-term interbank lending market where banks lend and borrow money from each other. The CBDC will be used as a token for settlement in this market, as per a rerport in the news agency PTI.

What Is Digital Rupee-Wholesale (e-W)?
The pilot project for the wholesale CBDC, known as the Digital Rupee-Wholesale (e-W), was launched on November 1, 2022. The use case for this pilot was limited to the settlement of secondary market transactions in government securities. The new pilot project will expand the use case of the CBDC to include transactions in the call money market.

RBI Testing Feasibility and Efficiency of CBDC
The RBI is conducting these pilot projects to test the feasibility and efficiency of the CBDC. The central bank is also looking to gather feedback from the participants in these markets to improve the design of the CBDC.

“The RBI will introduce the wholesale CBDC in the call market either this month or next month,” Choudhary said on the sidelines of the G20 Leaders’ Summit here. The introduction of CBDC was announced in the Union Budget 2022-23 by Finance Minister Nirmala Sitharaman and necessary amendments to the relevant section of the RBI Act, 1934, were made with the passage of the Finance Bill 2022.

RBI Selects 9 Banks: Check Full List Here
The RBI picked nine banks — State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, YES Bank, IDFC First Bank and HSBC — for its pilot project for wholesale CBDC.
Besides, the central bank has already rolled out a pilot in the retail version of the CBDC (e-R) on December 1, 2022. The e-R is in the form of a digital token that represents legal tender. It is being issued in the same denominations as the paper currency and coins. It is being distributed through financial intermediaries like banks. Users can transact with e-R through a digital wallet offered by the participating banks.

Source: https://www.india.com/business/rbi-to-launch-digital-rupee-pilot-call-money-market-by-october-full-list-banks-selected-sbi-kotak-mahindra-yes-bank-6308430/

Banks must allow retail borrowers to switch between fixed and floating rates: RBI

Banks must allow retail borrowers to switch between fixed and floating rates: RBI

Reserve Bank of India on Friday said regulated entities (REs) have the freedom and they must offer all categories of retail loans either on a fixed or floating interest rates basis.

At the time of sanction of EMI-based floating rate personal loans, RBI said regulated entities are required to take into account the repayment capacity of borrowers to ensure that adequate headroom or margin is available for elongation of tenor and or increase in EMI, in the scenario of a possible increase in the external benchmark rate during the tenor of the loan.
In the wake of rising interest rates, RBI said it had received several grievances from consumers related to the elongation of loan tenor and or increase in EMI amount, without proper communication with and or consent of the borrowers.
“In order to address these concerns, the REs are advised to put in place an appropriate policy framework meeting the following requirements for implementation and compliance,” RBI said.
As a part of the new rules, the central bank said:
At the time of sanction, regulated entities shall clearly communicate to the borrowers about the possible impact of change in benchmark interest rate on the loan leading to changes in EMI and/or tenor or both. Subsequently, any increase in the EMI or tenor or both on account of the above shall be communicated to the borrower immediately through appropriate channels.At the time of reset of interest rates, regulated entities shall provide the option to the borrowers to switch over to a fixed rate as per their Board approved policy. The policy, inter alia, may also specify the number of times a borrower will be allowed to switch during the tenor of the loan.

Source: https://www.businessinsider.in/personal-finance/news/banks-must-allow-retail-borrowers-to-switch-between-fixed-and-floating-rates-rbi/articleshow/102832754.cms

RBI Selects McKinsey And Company, Accenture Solutions To Use AI, ML To Improve Regulatory Supervision

RBI Selects McKinsey And Company, Accenture Solutions To Use AI, ML To Improve Regulatory Supervision | PTI

The Reserve Bank has selected global consultancy firms McKinsey and Company India LLP and Accenture Solutions Pvt Ltd India to develop systems using artificial intelligence and machine learning for its supervisory functions.

The RBI is looking to extensively use advanced analytics, artificial intelligence and machine learning to analyse its huge database and improve regulatory supervision over banks and NBFCs. For this purpose, the central bank plans to hire external experts.

In September last year, the RBI invited expressions of interest (EoI) for engaging consultants for the use of advanced analytics, artificial intelligence and machine learning for generating supervisory inputs.

Firms participated in the RFP

Based on the scrutiny/evaluation set out in the EOI document, the central bank had shortlisted seven applicants to participate in the request for proposal process (RFP) for the selection of consultant(s).

The seven firms were Accenture Solutions Private Limited; Boston Consulting Group (India) Pvt Ltd; Deloitte Touche Tohmatsu India LLP; Ernst and Young LLP; KPMG Assurance and Consulting Services LLP; McKinsey and Company; and Pricewaterhouse Coopers Pvt Ltd.

Of these, McKinsey and Company India LLP and Accenture Solutions Private Limited India have been awarded the contract, as per a Reserve Bank document.

The value of the contract is about Rs 91 crore.

While the RBI is already using AI and ML in supervisory processes, it now intends to upscale it to ensure that the benefits of advanced analytics can accrue to the Department of Supervision in the central bank.

The Department of Supervision has been developing and using linear and a few machine-learnt models for supervisory examinations. The interest now is to explore the data to identify its attributes that can be leveraged to generate new and improved supervisory inputs, said the EoI issued in September.

The supervisory jurisdiction of the RBI extends over banks, urban cooperative banks, NBFCs, payment banks, small finance banks, local area banks, credit information companies and select all Indian financial institutions.

It undertakes supervision of these entities with the objective of assessing their financial soundness, solvency, asset quality, governance framework, liquidity, and operational viability to protect depositors’ interests and financial stability.

Source: https://www.freepressjournal.in/business/rbi-selects-mckinsey-and-company-accenture-solutions-to-use-ai-ml-to-improve-regulatory-supervision

RBI largely expected to hike repo rate by 25 bps in April even as US Fed expected to take a pause

  • Most economists believe that a 25-basis-point rate hike in April is almost certain.
  • This is after the February CPI inflation print came in at 6.44% – a number that is slightly lower than January’s print of 6.52%, but still above the Reserve Bank of India’s upper tolerance limit of 6%.
  • The US Fed, which has so far led rate hike action, is expected to take a pause in March due to the collapse of Silicon Valley Bank and Signature Bank.

Shaktikanta Das-led Monetary Policy Committee (MPC) is expected to hike the repo rate by 25 basis points (bps) come April, as retail inflation continues to remain hot and above the central bank’s upper tolerance limit of 6%.

This is despite the fact that the recent collapse of Silicon Valley Bank and Signature Bank in the US has resulted in analysts saying the US Federal Reserve is likely to pause its rate hike spree to let the country’s banking system take a breather.

While the US Fed has led other central banks in raising interest rates so far, the Reserve Bank of India (RBI) could stick to its guns regardless of what the Fed does on March 22, when it meets to decide the direction of its monetary policy, analysts say.

“The RBI will remain hawkish in the April policy as inflation prints have spiked

back over 6% in January-February along with core inflation remaining sticky

Source : https://www.businessinsider.in/finance/news/rbi-largely-expected-to-hike-repo-rate-by-25-bps-in-april-even-as-us-fed-expected-to-take-a-pause/articleshow/98635125.cms?utm_source=social_sticky_non_amp&utm_medium=social_sharing&utm_campaign=Click_through_social_share

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