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  The Reserve Bank of India (RBI) has cut its projection for gross domestic product (GDP) growth for fiscal 2021-22 (FY22) to 9.5 per cent from the earlier forecast of 10.5 per cent. Consumer price inflation (CPI), the central bank said, is likely to be at 5.1 per cent in FY22 as compared to the earlier forecast of 5.2 per cent (5.2 per cent in Q1; 5.4 per cent in Q2; 4.7 per cent in Q3; and 5.3 per cent in Q4) with risks evenly balanced. “Going forward, the inflation trajectory is likely to be shaped by uncertainties impinging on the upside and the downside. The rising trajectory of international commodity prices, especially of crude, together with logistics costs, pose upside risks to the inflation outlook,” the RBI said. Adding: “Rural demand remains strong and the expected normal monsoon bodes well for sustaining its buoyancy, going forward. The increased spread of COVID-19 infections in rural areas, however, poses downside risks.” The lowering of GDP projections comes on the b...

  The Reserve Bank of India (RBI) on Wednesday took a series of liquidity-boosting and loan-relief measures to aid broad swathes of the economy walloped by the second wave of the covid-19 pandemic. Governor Shaktikanta Das said RBI will make available an on-tap liquidity window of ?50,000 crore, with a tenor of up to three years, under which banks can provide fresh lending support to a wide range of entities, including vaccine makers, importers of vaccines, covid-related drugs and priority medical devices, hospitals, pathology labs, manufacturers and suppliers of oxygen and ventilators, logistics firms and also to patients for treatment. This facility, which will be offered at the repo rate, will be available till 31 March 2022. The steps are likely to help the stressed healthcare industry expand facilities to treat more patients amid the rampaging second wave. With thousands of sick people seeking treatment, hospitals are overwhelmed and are running out of medical-grade oxygen. Va...

  Unlike monetary policy, which is conducted under the explicit mandate of inflation targeting, foreign exchange management is left to the discretion of the Reserve Bank of India (RBI). For many years now, RBI has maintained that it does not target any value of the Rupee, and only steps in at times to control some unstated measure of currency volatility. However, the sheer magnitude and nature of RBI intervention leaves it as a substantial determinant of currency market rates, irrespective of its stated policy or intent. And the central bank’s role in the currency market has been manifesting in a major way particularly over the past few months. The core of RBI’s intervention policy through FY21 was excellent. It acted as a volatility heat sink amidst massive foreign exchange inflows. It prevented excessive rupee overvaluation that could have impeded India’s domestic output, employment, and the prospects of the Atmanirbhar Bharat tilt. However, aspects of the impossible trinity—the ...

  With the beginning of new financial year from Thursday, there will be a host of changes in how you spend money. From changes airfare to standard insurance policies, several new norms will be effective from 1 April. The interest earned on employee's contribution above ?2.5 lakh in a year will be taxable from this month. Buying a pension cover will become easier. Take a look at key changes that are going to take place from 1 April. LPG cylinder prices to become cheaper Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation have announced to reduce the price of domestic cooking gas (LPG) by ?10 a cylinder from April In Delhi and Mumbai, a 14.2 kg non-subsidised LPG cylinder will cost around ?809. A LPG cylinder will now be available at ?835.50 in Kolkata. In Chennai, a LPG cylinders will be priced at ?825. Air travel to become costlier Starting from this month, you air travel will become costlier. Aviation regulator Directorate General of Civil Avia...

  The Reserve Bank on Monday asked banks to implement the image-based Cheque Truncation System (CTS) in all branches by September 30, a move aimed at faster settlement of cheques resulting in better customer service. There are about 18,000 bank branches that are still outside any formal clearing Last month, the Reserve Bank of India (RBI) had announced pan-India coverage of CTS by bringing all bank branches under the image-based clearing The CTS is in use since 2010 and presently covers around 1,50,000 branches. All the erstwhile 1,219 non-CTS clearing houses (ECCS centres) have been migrated to CTS effective September 2020. It is, however, seen that there are branches of banks that are outside any formal clearing arrangement and their customers face hardships due to longer time taken and cost involved in collection of cheques presented by them, the RBI said. "To leverage the availability of CTS and provide uniform customer experience irrespective of location of her/his bank branc...

  The Finance Ministry on Monday released the 11th instalment of Rs 6,000 crore to states and UTs to meet the GST compensation shortfall, taking the total amount provided so far under this window to Rs 66,000 crore. The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of GST. The Ministry of Finance in a statement said it has released the 11th weekly instalment of Rs 6,000 crore to states/Union Territories to meet the GST compensation shortfall. Out of this, Rs 5,516.60 crore has been released to 23 states and Rs 483.40 crore to the three Union Territories (UTs) with Legislative Assembly (Delhi, Jammu & Kashmir and Puducherry), who are members of the GST Council. The remaining five states, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation, it said. "The amount has been borrowed this week at an int...

The Reserve Bank of India has raised concerns on the increase in assets of money market mutual funds (MMMFs) in the past few months. The central bank observed that the infusion of liquidity in the wake of the pandemic had led to a sharp decline in term rates. Even as deposit yields fell, assets under MMMFs have grown, indicative of a search for yield. “Such risk taking among institutional investors, specifically in illiquid investments to earn targeted returns, may lead to build-up of financial vulnerabilities, with adverse implications for financial stability,” the RBI said in its financial stability report released on Monday. Average net assets under management of such money market funds rose to Rs 96,210 crore in December, up 61 per cent over Rs 59,512 held in April, the data from Association of Mutual Funds in India shows. The central bank said excess returns of MMMFs had started to normalise after turning negative in the previous quarter, reflecting increased proportion of liquid ...

  The Securities and Exchange Board of India (Sebi) has asked lenders to Dewan Housing Finance Corp. Ltd (DHLF) for details on the credit rating claims raised by Oaktree Capital in its bid for the bankrupt mortgage lender, two people aware of the matter said. The private equity firm recently wrote to DHFL’s committee of creditors that, according to views from some credit rating agencies, non-convertible debentures worth ?21,000 crore that DHFL will issue under its ownership will have better credit ratings than those proposed by rival Piramal group. The stock market regulator has asked the DHFL administrator for names of the credit rating agencies cited by Oaktree, as offering any such views or ratings grade or outlook on future plans or instruments would be a violation of its regulations on credit rating agencies, according to the people mentioned above, who spoke on condition of anonymity. Sebi also asked the lenders about the stance taken by lenders in this respect. The regulator...

  India’s key money-market rates and yields on short-term debt are set to rise after the central bank took its first small step to unwind emergency pandemic measures. The Reserve Bank of India will aim to drain 2 trillion rupees ($27.3 billion) of banking funds via a 14-day reverse repo operation on Jan. 15, the central bank said in a statement late Friday. This is the first move in a phased normalization of the central bank’s liquidity operations, it said. There has been growing consensus among traders that the RBI will have to start draining excess cash, as surging liquidity caused money-market rates to drop below the central bank’s interest-rate corridor and distort asset pricing. Quantum Asset Management Ltd. and IDFC Asset Management Ltd. have been among those forecasting that short-end rates will rise faster than the long-end as a result, though nobody expects the central bank to abandon its easy policy. The announcement is “a clear signal from the central bank that it wants ...

  The Reserve Bank of India’s (RBI) resolve to keep bond yields under check and the loud signal emitted in favour of a stronger rupee swiftly translated into rallies in the bond and currency markets on Tuesday. The rupee closed at 72.87 a dollar, up 1.03 per cent from its previous close of 73.62. The 10-year bond yields fell 18 basis points to close at 5.942 per cent from its previous close of 6.117 per cent. While announcing the bond market related measures on Monday post market hours, the central bank had observed that the “recent appreciation of the rupee is working towards containing imported inflationary pressures.” The central bank in the past few sessions had stopped buying dollars and let the rupee appreciate in sync with the daily deluge of capital flows. The statement made the central bank’s intent clear. In the absence of meaningful export growth in a contracting global economy, the RBI was more willing to curb imported inflation through stronger rupee. On a larger theme...

  Goods and services tax (GST) collections slumped to a three-month low in August, and came in 12 per cent lower year-on-year (YoY), indicating slower recovery in economic activity. However, compensation cess collections rose for the first time in five months, and 6 per cent YoY, amid the tussle between the Centre and states. The overall mop-up remained well below the Rs 1-trillion mark for the sixth straight month owing to the pandemic, even as unlocking began in June. GST collections stood at Rs 86,449 crore in August, compared to Rs 87,422 crore in July, according to finance ministry data. It was at 88 per cent of August 2019 collections. A large portion of the fall could be attributed to imports, which were down 23 per cent YoY, while domestic transactions were down just 8 per cent YoY. “During the month, revenues from imports were at 77 per cent and revenues from domestic transactions (including import of services) at 92 per cent of revenues from these sources during the same ...