Category: MPC

*****Go slow on rate hikes: Make capital accessible and affordable to drive investment and job creation

Read more at:https://economictimes.indiatimes.com/opinion/et-commentary/go-slow-on-rate-hikes-make-capital-accessible-and-affordable-to-drive-investment-and-job-creation/articleshow/134876023.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst We have entered a golden age of Indian entrepreneurship. The number of active companies has risen by more than half a million

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*******Observations and suggestions from Chief Economist RBL Bank [1] last 12 months –India’s annual merchandise imports $830 billion and exports $476 billion [2] Forward book as of August swelled to $200 billion– very premise of currency depreciation to be contained via FCNR has been short lived [3] Why RBI stopped at 25 when perhaps 50 bps was needed ? Was it because transmission could be slow — because of huge unabsorbed liquidity? Article Courtesy BusinessLine

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*******SBI Chairman’s views on the latest MPC decisions [1]More than 50% of banking system loans r linked to external benchmarks which means they are repriced immediately–[2] Credit growth is being supported by the ample liquidity available [3]Action on deposit front normally–begins with a time lag and this time [also] because of ample liquidity in the system — it will begin after 2/3 quarters [4] NIM for next 2/3 quarters will improve–  Courtesy BusinessLine

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*******MPC meet — Takeaways [1] Credit growth–at present–18% [2] Some moderation likely as policy rate transmission takes place over the next couple of quarters which will affect demand & costs [3] RBI wants banks to deploy FCNR [B] deposits not at one go [4] Currency leakage will absorb 3 lac crores of liquidity [5] CRR increase is least preferred option – to absorb liquidity [6] Corporates r holding healthy cash reserves & bank credit remaining robust, India’s dependence on global capital is lower than that of many  other economies– Courtesy BusinessLine

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