RBI Monetary Policy 2023 LIVE updates: 'Banks don't lend on market cap,' says Shaktikanta Das on Adani Group vs Hindenburg

RBI Deputy Governor says banks' exposure to Adani Group 'not very significant'

Reserve Bank of India (RBI) Deputy Governor MK Jain said during a post-MPC press conference that banks' exposure to the Adani Group is not very significant. 

-- PTI

RBI MPC announcements 2023: Luxury residential demand likely to remain unfazed, says S Raheja Realty

“The policy rate was raised by the RBI by 25 basis points to 6.5%, we believe that this will be followed by a protracted period of waiting and watching. Most banks have already hiked house loan rates by about 200 basis points on borrowers as of this writing. The effects of the higher policy rates would be felt most quickly by current home loan borrowers.  As house loan rates rise current home loan borrowers would be charged higher rates starting from the interest reset dates established for them by the banks as a result of higher repo rates eventually increasing the cost of funding for all lenders. Overall economic outlook looks positive and growth prospects remain upward bround; therefore the luxury residential demand is unlikely to waver. ”

-- Ram Raheja, Managing Director at S Raheja Realty 

Also read: 250 bps repo rate hike in FY23! Is RBI set to declare rate hike innings in next financial year?

RBI MPC news: Made an assessment of lenders' exposure to Adani Group companies, says Shaktikanta Das

RBI Governor Shaktikanta Das said, "RBI has made an assessment of lenders' exposure to Adani Group firms; large exposure guidelines have been complied with by all banks."

RBI post-MPC press conference: Banks lend on fundamentals of companies, says Shaktikanta Das on Adani Group

RBI Governor Shaktikanta Das said, "The whole perception is coming because of the market capitalization of shares of the group. Banks don’t lend on the basis of the market cap, but on the strength and fundamentals of companies."

RBI to allow lending, borrowing of G-Secs, raises trading hours

The Reserve Bank proposed to permit the lending and borrowing of government securities (G-Secs). RBI Governor Shaktikanta Das said the step would provide investors with an avenue to deploy their idle securities, enhance portfolio returns and facilitate wider participation. The central bank also decided to restore market hours for the G-Secs market to the pre-pandemic timing. (Read more)

RBI MPC Updates: Tug of war between growth, inflation continues, says Kotak Investment Advisors

Lakshmi Iyer, CEO-Investment Advisory, Kotak Investment Advisors Limited said, "The rate hike was in line with expectations. However, markets were expecting an explicit statement suggesting a pause which has not happened. This suggests the tug of war between growth and inflation continues. While chances of pause still remain, the uncertainty may persist. Expect range bound yield movement till then - oscillating between global data and domestic cues."

RBI MPC Updates 2023: Expect RBI to pause rate hikes from next policy onwards, says Kotak Institutional Equities

Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities said, "The RBI as expected hiked repo rate by 25 bps. The split mandate of 4-2 was also as expected. The stance too was unchanged which is in line with the excess liquidity continuing to be tightened. We see the RBI remaining concerned on inflation, especially core inflation. We expect inflation to average around 5.2% in FY2024 with adverse risks to growth likely to increase. The RBI will likely become increasingly data dependant and look at the impact of the past rate hikes on inflation-growth dynamics. We expect the RBI to pause from the next policy onwards with a likely shift in stance to neutral as the liquidity tightens further over March-April."

RBI MPC Updates 2023: Pragmatic approach adopted by RBI, says Resurgent India

"On expected lines, the RBI has gone in for a smaller dose of a repo rate increase by 25 basis points taking into account the moderation of inflation but a continued vigil is required on core inflation. The overall stance has been maintained and not yet shifted to neutral indicating the approach RBI to take calibrated steps to Meet the challenges of the growth vs inflation matrix.

The persisting uncertainties and volatile global scenario have prompted the RBI to revise downward the next year's GDP growth rate to 6.4% which is however still well comparable with peers. The stock market is expected to respond positively to the measures announced by RBI, with the underlying resilience of the economy being at the forefront. The RBI has also announced measures to widen the government securities market by amending the mechanism of lending and borrowing of government securities which will also provide depth to the market and facilitate smoother government borrowings for the next financial year. The banking sector is also expected to respond positively with healthy credit growth and a positive real rate of interest to the depositors. Overall a pragmatic approach was adopted by RBI with the intent to have an immediate focus on inflation while supporting growth in the medium term."

-- Jyoti Prakash Gadia, Managing Director at Resurgent India

25bps repo rate hike well-balanced between handling inflation, economic growth: Knight Frank India

“The 25bps hike in repo rate announced by the RBI is a well-balanced approach between handling inflation and economic growth. This was expected by the industry as inflation rate has remained above the tolerance band, though it has softened in the last few months. This hike will further help moderate inflation in the economy. A 25bps hike in Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) rate respectively to withdraw surplus liquidity would further support in stabilizing inflation in the economy. 

Since the beginning of the rate hike cycle, which began in May 2022, the RBI has hiked its repo rate by 250 bps. With an MCLR rate of 8.4%, about 60% of the repo rate hike, so far, has already transmitted into the lending rates. Thus, the borrowing costs have significantly increased across the product categories including the housing sector. Post today’s rate hike, borrowing costs could be expensive by another 10 – 15 bps, on an immediate basis. 

The impact of interest rate hike on the housing sector has been limited. The Knight Frank affordability index has deteriorated marginally by an average 1.4% over the last year. Demand for home loans has remained strong during the last year, as seen in 16% growth in December 2022. We hope that this rate hike will not adversely impact consumer sentiments towards home purchases in the coming financial year. 

The RBI also shared that the GDP growth has moved upwards to 7% from the previous estimates of 6.8%. In terms of growth, India remains a bright spot while other key economies face recession risks.”

-- Shishir Baijal, Chairman & Managing Director, Knight Frank India

Continued rate hikes by US Fed, ECB, other international banks dictated RBI's decision: Anand Rathi Shares and Stock Brokers

“The 25 basis points rate hike by the Reserve Bank of India today has been in line with the consensus expectations. We, however, felt the possibility of a rate pause this time around was at least 50%. On the inflation front, the major softening in India post April 2022 was there main reason for us to expect a standstill in this policy. On the contrary, the Reserve Bank of India seems to have been more bothered about the high and sticky core inflation for more than a year. More importantly, the continued rate hikes by the Bank of England, the ECB, and the US Federal Reserves and the implications of these in the foreign exchange market influenced the decision of the Reserve Bank of India to go for another rate hike. Unless there is an unexpected flare in inflation, we would expect the Reserve Bank of India to maintain unchanged policy rate for the remainder of 2023. This would be positive both for the debt and equity markets.”

--Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers

RBI MPC Meet 2023: 'Not taking foot of the pedal,' says Kotak Mahindra AMC's Nilesh Shah

Kotak Mahindra AMC's Nilesh Shah tweeted, "The RBI is like our cricket team in 3 ODI vs NZL. After hitting bowlers out of stadium, dismissed batsmen cheaply for a big margin win. The RBI could have said war over inflation is insight. They are not taking foot of the pedal. They are containing inflationary expectations."

He further wrote, "No wonder if noble laureate Joseph Stieglitz admiration for Dr Y V Reddy (if the US Fed had a governor like Dr Reddy, sub prime crisis would not have occurred) gets repeated for Shaktikanta Das."

Also read: RBI’s UPI push: G20 travellers can use UPI for payments at select airports

RBI repo rate hike: Repeated hikes may have a short-term impact, says Sterling Developers

"There is no denying the fact that the increase in the repo rate would definitely impact housing affordability. The repeated rate hikes may have a short-term impact on overall housing demand and the buyers’ overall acquisition cost would go up. This comes at a time when the real estate sector had shown recovery across important property markets driven primarily by end-users, and this hike may again impact the rate-sensitive sector. However, there is a silver lining as the government has earmarked huge outlay on infrastructure and is geared towards higher public expenditure as outlined in Budget 2023-24. Additionally, the buying power of consumers has gone up with greater income flow in recent times. Hence, we believe that the demand for residential segment would remain robust in the near future, any hike in interest rates notwithstanding. Also, the strong fundamentals for housing demand will keep the momentum upwards for realty sales. It also has to be kept in view that real estate is considered as the safest best for investment compared to other instruments. All of this will boost real estate and enhance economic growth in the larger context."

-- Ramani Sastri - Chairman and MD, Sterling Developers

RBI MPC Meet 2023 LIVE Updates: Next monetary policy committee meeting

RBI MPC Meet 2023: The next monetary policy committee (MPC) meeting will take place on April 3,,5, and 6. 

RBI MPC news: Market a tad disappointed, says TRUST Mutual Fund's Sandeep Bagla

"A 25 bp hike in repo rate by RBI was baked in bond yields. 2 out of 6 MPC members voted for no rate hike. Market is a tad disappointed as there was no change in stance from “withdrawal of accommodation” to neutral. CPI Inflation is projected for FY24 at 5.3%. Market forecasters are expecting inflation to trend lower from RBI projections. The policy remains focussed on fighting inflation and should be welcomed by markets."
 

-- Sandeep Bagla CEO, TRUST Mutual Fund

RBI MPC Updates: Balanced, non-committal and data-dependent, says Emkay Global Financial Services

"MPC first cut: Balanced, non-committal and data-dependent

The RBI MPC expectedly increased the policy rate by 25bps with a balanced tone, albeit non-committal and data dependent, partly as inflation is still around the 6% upper tolerance mark, even though it is poised to ease. 

They have maintained the current stance of "withdrawal of accommodation" to keep policy flexibility ahead, while they acknowledged the recent pace of policy tightening.

The fast-evolving world order has meant that data-led policy repricing keeps markets on their toes, and they keep swinging on the timing and extent of policy pivots. 

However, on net basis, even as global tightening is still expected, the anticipation of slowing pace of hikes has eased financial conditions somewhat. This hints that EM Asia central banks, including RBI, could breathe easier. 

With this hike of 25bps, the one-year ahead estimated real repo rate will likely get fairly positive (implying a pause, although not necessarily an end to the cycle). 

We maintain that the RBI would not turn too restrictive but reckon the situation globally is fluid, and macro assessments might require appropriate adjustments ahead from the policy perspective. 

The extent of global disruption and disinflation will also remain key to the RBI's reaction function ahead."

-- Madhavi Arora, Lead Economist, Emkay Global Financial Services

RBI MPC Updates: RBI policy on expected lines, says Governor Shaktikanta Das

"RBI Credit policy is on expected lines. Major indicators showing stability. Growth of 7% for current year and 6.4% for FY 24. Inflation also seems to be within range and for current year of 6.5% and coming down to 5.3% in FY24. Both on front of Currency performance and FX reserves are in better condition. Overall policy as per market expectations."

-- Kamlesh Shah, President, Association of National Exchanges Members of India (ANMI)

RBI MPC live: RBI hikes repo rate by 25 bps; Here's how your loans will be impacted

Bankbazaar.com CEO and co-founder Adhil Shetty and co-chair of the FICCI Fintech Committee said, "Global economic volatility and uncertainty and surging inflation have prompted the RBI to make another policy rate hike, taking the repo rate to 6.5%. The silver lining is that the inflation is likely to moderate in 2024-25 and the RBI seeks to bring down the inflation to its target levels - within 4%. The smaller rate hike today can also be attributed to softening of retail inflation and the US Federal Reserve moderating the pace of increase in its benchmark interest rate. In December, the apex bank raised the key benchmark interest rate (repo) by 35 basis points (bps) after delivering three back-to-back increases of 50 bps. The recent hike will burden existing borrowers, and new borrowers will have to borrow at higher interest rates. It will make retail loans such as home, auto, and personal loans and others costlier, and borrowers will have to be ready for higher monthly EMIs or tenor extensions, or both. 

When the repo rate rises, it becomes more expensive for banks to borrow from the central bank, and as a result, they often pass on the increased cost to their customers in the form of higher interest rates on loans. It means that loan borrowers may have to pay more in interest, which can increase their monthly repayments. This can affect their financial situation, especially if they have multiple loans or a limited income. However, it should also be noted that a rise in the repo rate is usually a sign of a tightening monetary policy aimed at controlling inflation, which can also positively impact the economy in the long term.
 

Here is what loan borrowers must do:

1. Increase EMI once a year by 5%. This will pull your tenor back by a few months. Next year, take stock and repeat the dose if required. Make this an annual exercise. 

2. A 20-year loan can be repaid in 12 years if you pre-pay 5% of the loan balance once a year. You could go faster or slower depending on your situation. A home loan is a low-cost loan so for most, it makes sense to repay it slowly while balancing it with investing needs. The markets have returned 12% over the long-term and the cost of a home loan with tax deductions may be 5-7% a year.

3. Above all, what matters is the timeframe in which you intend to repay the loan. For example, your intention was to repay a 20-year loan in 10 years but the rate hikes have taken your tenor to 25 years. In this case, ensure that for the next 10 years, you pay back at least 10% of the loan through a combination of EMIs and pre-payments. This will keep you on track for your goal."

RBI proposes to extend UPI facility for merchant payments, says RBI Governor

Governor Shaktikanta Das said, "RBI proposes to extend UPI facility to inbound travellers for merchant payments; initially to travellers from G20 countries." He added that travellers from G20 countries will be able to avail this facility at select international airports on arrival. 

RBI MPC announcements news: RBI Governor announces penal interest on loans

RBI Governor Shaktikanta Das announced penal interest on loans to ensure transparency, reasonableness and consumer protection, draft guidelines to be issued, on levy of penal charges, to obtain comments from stakeholders. 

RBI repo rate hike: Rate hike may further impact affordable housing demand, says ANAROCK

"The 25 bps rate hike is much along the expected lines. With repo rates now at 6.5%, there could be some repercussions on housing uptake as home loan interest rates will head further north. The rates had already crept up after five consecutive rate hikes over the last one year. This will add to the financial burden on homebuyers as apart from home loan interest rates, property prices have also inched up in the recent past two to three quarters.

Given that interest rates may breach the 9.5% mark with today’s hike, we may see some pressure on sales volumes in the affordable and lower mid-range housing segments, which are more cost-conscious. The affordable segment has already been in the doldrums, and adding further to the cost of acquisition obviously does not help.

That said, the Indian housing market continues to be largely end-user driven - and end-users, unlike investors, focus less on ROI and more on the perceived value of homeownership. Furthermore, commodity prices are now falling and inflation is moderating. As such, we are unlikely to see any hikes in the near future, which will be positive for the housing sector in the times to come.

The monetary policy impacts real estate demand in several ways. When the central bank raises interest rates, borrowing costs for buying real estate increase, which can reduce demand for housing. Conversely, when interest rates are low, borrowing costs are lower, and demand for real estate may increase. Also, an expansionary monetary policy, which increases the money supply, can lead to increased consumer spending and borrowing, potentially driving up demand for real estate.

Finally, confidence in the economy is closely tied to the monetary policy. When the central bank is seen as effectively managing the economy and maintaining stability, it can increase consumer confidence and demand for real estate."

-- Anuj Puri, Chairman-- ANAROCK Group