Skip to main content

RBI likely to cut rates your EMIs may come down soon

By
All eyes on governor Rajan, falling inflation could be silver lining
Reserve Bank of India (RBI) governor Raghuram Rajan is widely expected to cut interest rates on Tuesday, a move thatat will bring down EMIs for home loan borrowers and help companies raise cheaper funds to aid expansion plans.
Inflation rates in India are currently at historic lows. While wholesale price index (WPI) –based inflation fell 4.95% in August, compared to a 4.05% decline in the previous month ,h retail inflation rose 3.66%, slower than the 3.69% increase in July.
The plunge in inflation rates has triggered hopes that Rajan would likely cut interest rates inn the monetary policy review onn September 29.
The government has also made it more than obvious that it wants the RBI to cut rates, given the wider elbow room thee central bank enjoys from the cur-rrently “deflationary” trends inn the economy.
Rajan has cut the repo rate— the rate at which banks borrow from the RBI — by 0.75 percent-tage points in three tranches sincee January.
Although he kept the rate unchanged in August, the RBI governor kept the door ajar forr reducing borrowing costs if infla-ation remained low and stable.
Corporates and individual borrowers will be hoping for lower borrowing rates to help their plans to buy houses and goods such as cars, which peak during the festival shopping season in October and November, and are mostly bought through loans.
“We expect the RBI to deliver a 0.25 percentage point rate cut at its policy meeting,” said Sonal Varma of Nomura, a research and investment banking firm.
Analysts and policy makers will also be watching for the RBI’s guidance on growth in the broader economy amid chances that the central bank might lower India’s GDP growth projections for 2015-16 from its earlier 7.6% forecast, given deficient monsoon and weak external demand.
Some analysts expect the RBI to maintain a status quo on rates.
“There is a strong reason to keep rates unchanged considering that the concerns the RBI had in the August policy linger even today. In fact the additional information we have is of the kharif crop being less than last year, which will exert pressure on prices,” research firm Care Ratings said in a latest report.
Chief economic adviser Arvind Subramanian has said India was closer to “deflation”, while minister of state for finance minister Jayant Sinha held: “We have to be very mindful and watchful of that (deflation), and that will be put into account when RBI considers its monetary policy.”
Rajan may allude to the description about deflation because it can be reflective of weak economic activity, a sign that people are putting off purchases as their incomes aren’t rising, or are even falling, which may not be borne out by shop-end data.
Hindustan Times, New Delhi, 28th Sept. 2015 

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more