Category: RBI–Banks

*******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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SBI DGM [Economist]–” FCNR[B] benefits outwieigh costs “–[1] Hedging cost $16.3 billion while investment income [ US Treasury ] will be $22.4 billion –net surplus being $6.1 billion [ which translates into -Rs.58372 crores at the current exchange rate [2] So it will not be fiscal drag [3] Liquidity dynamics –12 trillion of rupee liquidity offers much relief to banks to lend to the productive sectors and it eases  elevated CD ratio [3] Banks may need couple of quarters to use these surplus funds [4] RBI’s forward position will be taken care of [ $100 billion short dollar position with $40 billion maturing within an year –As these positions unwind, liquidity will automatically contract [5] September and October which  are — traditionally liquidity strained months –because of advance tax, credit growth–capex revival, government borrowing and import payments ahead of Diwali & festival induced purchases –will have absorbed much of this surplus–Article by Mr Bibekananda Panda — Courtesy BL

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RBI Guv on fintechs–[1] Helped bridge India’s MSME’s credit gap by extending formal, collateral like credit to millions of small businesses that were invisible to traditional underwriting models-[2] Fintechs have taken banking from the branch to the hand of every citizen [3] Fintechs have improved customer experience and efficiency in India’s financial infrastructure, reducing account opening and payment settlement times, cutting transaction costs, strengtheing fraud detection through AI driven analytics–enabling real time supervision– Courtesy BL

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