Shyam Singh’s Post

Repo Rate: RBI did not change the interest rates for the ninth consecutive time, repo rate remains at 6.5% #BimonthlyMonetaryReview #change #consecutive #GovernorShaktikantaDas #interest #MPCMeeting #ninth #rate #Rateofinterest #rates #RBI #RBIGovernor #rbimonetarypolicycommittee #rbireporate #remains #repo #reporate #time

UASA Media Release: First repo rate cut in four years brings relief UASA welcomes today’s long-awaited repo rate cut – the first in more than four years – by the South African Reserve Bank’s (SARB’s) Monetary Policy Committee (MPC). Following yesterday’s Consumer Price Index (CPI) announcement stating that inflation fell below the SARB’s 4,5% target range, the 25-basis point cut in the repo rate to 8% is a welcome relief for most workers and consumers. The prime lending rate will now be 11,50%. Given the current outlook, the repo rate will likely drop again in November by at least 25 basis points. The CPI outlook has also brightened as inflation expectations decreased to 4.8% for 2025 and 2026 from above 5%. Consequently, South African consumers can look forward to further interest rate reductions in the New Year. Although depositors will receive a lower income from interest-related investments, borrowing costs will decrease and provide relief to consumers, especially those with high levels of debt. The governor of the SARB, Lesetja Kganyago, warned that many upside risks to the CPI still exist and that the MPC will remain data-dependent at future MPC meetings. This cut will make borrowing more attractive for individuals and businesses alike, encourage consumer spending and hopefully set us on the track of economic recovery. At the very least the cut will ease the financial stress of workers in these difficult times. The next MPC meeting is on 21 November. www.uasa.org.za

How Reserve Bank Of India Allocates Surplus Of Profits (Dividend) To The Government? For the year 2023-24, the RBI has transferred a record dividend of ₹2.11 trillion to the Govt as against transfer of ₹87,416 crore in the previous fiscal year thanks to a high income from the liquidity management operations, investment in foreign securities, profit on sale of foreign currencies. 🟦 Revised Economic Capital Framework The economic capital framework provides a methodology for determining the appropriate level of risk provisions & profit distribution to be made under Section 47 of the RBI Act, 1934.  Section 47 of the RBI Act, 1934 provides that “After making provision for bad and doubtful debts, depreciation in assets, contributions to staff & superannuation fund and for all other matters for which provision is to be made by or under this Act or which are usually provided for by bankers, the balance, of the profits shall be paid to the Central Govt.” ◼️ Economic Capital Economic capital of a central bank includes its capital, reserves, risk provisions & revaluation balances.  ◼️ Revaluation Balances Revaluation balances are unrealised gains, net losses resulting from movement of exchange rate, gold price or interest rate viz. Balances in Currency & Gold Revaluation Account, Investment Revaluation Account-Rupee Securities, Investment Revaluation Account -Foreign Securities, Foreign Exchange Forward Contracts Revaluation Account. ◼️ Realised Equity Realised equity is the component of RBI’s economic capital comprising its capital, reserve fund and risk provisions. ◼️ Risk Provisions i) Contingency Fund: It includes provisions for unforeseen contingencies arising from depreciation of securities or monetary/exchange rate policy risks. ii) Asset Development Fund : It is the amount set aside for investment in subsidiaries and internal capital expenditure. iii) Contingent Risk Buffer(CRB) : CRB comprises of risk provisions made from economic capital to cover monetary, fiscal stability, credit & operation risks. As per Bimal Jalan committee report, the RBI should also include its revaluation balances as part of overall risk buffers, but these balances should be treated as limited purpose risk buffers to be used against market risks only. 🟦 Surplus Distribution Policy The current surplus distribution policy targets only the total economic capital. The Committee recommended that the target should also include realised equity.  ▪️The size of the realised equity, in the form of CRB, must be maintained between 5.5% to 6.5% of the RBI’s balance sheet. ▪️The total economic capital should be maintained between 20.8% to 25.4% of the balance sheet. If the realised equity is above the required levels, the entire net income of RBI is to be transferred to the government. If it is lower, risk provisioning is to be made to the necessary extent and only the residual net income is to be transferred. Thanks for reading….

RBI Monetary Policy 2024 Highlights: Key Decisions and Market Impact 👇 Repo Rate Unchanged at 6.5% RBI Governor Shaktikanta Das announced that the Monetary Policy Committee (MPC) decided to keep the benchmark repo rate unchanged at 6.5% for the 11th consecutive meeting. The monetary policy stance remains ‘Neutral.’ CRR Cut by 50 bps to 4% The Cash Reserve Ratio (CRR) has been reduced by 50 basis points to 4%. This move is expected to inject additional liquidity into the banking system and boost credit flow. New Benchmark: Secured Overnight Rupee Rate (SORR) To enhance the credibility of interest rate benchmarks and develop the derivatives market, the RBI will introduce the Secured Overnight Rupee Rate (SORR). This benchmark will be based on secured money market transactions, including overnight repo and TREPS. SFBs to Offer Credit Lines via UPI Small Finance Banks (SFBs) have been permitted to extend pre-sanctioned credit lines through UPI. This initiative aims to deepen financial inclusion, especially benefiting ‘new-to-credit’ customers. Inflation Projections Raised for FY25 The RBI revised its FY25 CPI inflation target upward to 4.8% (from 4.5%). Q3 FY25: Increased to 5.7% (from 4.8%). Q4 FY25: Increased to 4.5% (from 4.2%). Q1 FY26: Increased to 4.6% (from 4.3%). Q2 FY26: Estimated at 4%. GDP Growth Estimate Lowered The FY25 GDP growth projection has been cut to 6.6% (from 7.2%). Q3 FY25: Revised to 6.8% (from 7.4%). Q4 FY25: Revised to 7.2% (from 7.4%). Q1 FY26: Revised to 6.9% (from 7.3%). Q2 FY26: Estimated at 7.3%. Impact on Markets Indian equity markets (Sensex and Nifty 50) turned positive after the CRR cut announcement, signaling optimism among investors. Stay tuned for further updates as the RBI’s policy measures unfold and their implications become clearer for the financial markets and the broader economy.

Repo Rate Remains Unchanged This morning, the RBI's Monetary Policy Committee decided to keep the repo rate steady at 6.5% - a move that's keeping borrowing costs unchanged for the tenth time in a row. But there's more to it: The RBI has shifted its policy stance from 'withdrawal of accommodation' to 'neutral'. This means the RBI is now positioning itself to be more adaptable, potentially paving the way for future rate adjustments. GDP growth is retained at a robust 7.2% for FY25. This reflects confidence in our economic resilience despite global headwinds. Inflation is held at 4.5% for the fiscal year. With geopolitical tensions and food prices in flux, this stability speaks volumes about RBI's cautious optimism. Why Does This Matter? Despite pressures from food and fuel, the RBI believes in our economy's growth story. The neutral stance indicates a readiness to either control inflation or boost growth as needed, ensuring we're not caught off-guard by global economic shifts. As the repo rate remains unchanged, loan rates linked to this rate will stay the same, meaning borrowers won't see their EMIs rise. It's anticipated that the RBI might reduce the repo rate by 0.5% in December 2024 if food prices go down. What are your thoughts on this? How do you think this policy impacts us?

#Business | 🔍 RBI Monetary Policy tomorrow: 5 key things to watch! If the repo rate stays put, it'll be the 9th time in a row. 📉📊 reports Manish M. Suvarna Tap to know more⤵️ https://lnkd.in/dr38cGB3 #RBIMonetaryPolicy #Reporate #ReverseRepoRate

RBI MPC Update – new Era of transformation Summary RBI kept the policy repo rate unchanged (4:2 majority vote with the two exceptions being Prof. Jayanth Varma & Dr. Ashima Goyal) at 6.50% for the eight straight policy with no specific tilt and hence a non-event for the markets. RBI is expected to track the Union Budget in July & normalcy levels of the monsoon (IMD expects at 106% of LPA). We expect RBI to cut repo rate by a total of 50bps in 2024 (25bps each likely in Oct and Dec, 24) with FED expected to cut their interest rate by 25bps each in Sep and Dec, 24. Other key interest rates also kept unchanged (SDF – 6.25%, MSF and Bank rate – 6.75%). Stance also was status quo – remain focussed on “withdrawal of accommodation”. 4/6 MPC members voted for policy decision and similarly 4/6 voted for stance decision. Monetary policy has greater elbow room to pursue price stability to ensure that inflation aligns to the target on a durable basis. FY25 GDP projections increased for all quarters - Q1 by 20bps to 7.3%, Q2 by 30bps to 7.2%, Q3 by 30bps to 7.3% and Q4 by 20bps to 7.2%. FY25 GDP projection increased by 20bps to 7.2%. FY25 Inflation projections kept status quo. Market impact @ 12.30pm post MPC: Equity indices up 1% likely on political developments; USD/INR almost flat but Annualised forwards in 6m lower by 0.4%, Government securities yields mostly flat but 5y Overnight Indexed Swaps (OIS) fell by 3bps. Press conference comments- a) Neutral rate will be published in the bulletin. b) Nothing is off the table, including rate hikes. c) Not in a position to comment on fiscal consolidation at the moment, it is the remit of the government. d) Once inflation reaches 4%, it needs to hold at that level for us to start thinking of further policy action. e) Risks can emerge from credit-deposit ratio widening further - want banks to restrategise their business. f) Have a lot of instruments to manage debt index inclusion related inflows.

The MPC's decision to hold rates while adopting a neutral stance is, in my eyes, a largely positive development, though I wouldn't deny my hopes dampening a bit due to key rates remaining unchanged. The lack of movement in terms of repo rate was probably needed to ensure continued stability in the liquidity landscape, ensuring that borrowing costs remain plateaued for both developers and consumers. Meanwhile, adopting a neutral stance implies the possibility of future rate reductions, potentially boosting future demand. In my opinion, this approach is highly nuanced, aiming to maintain the current robust status quo. Stakeholders can take advantage of this by choosing a more aggressive scale-up, particularly in light of potential future movements in benchmark rates. Read more: https://lnkd.in/dyiYV-qB The Economic Times #GDP #Inflation #MonetryPolicy

RBI Policy Highlights Rate Announcements: • RBI decided to keep repo rate unchanged at 6.50% by a majority of 5 out of 6 members • MPC decided to remain focused on withdrawal of accommodation by a majority of 5 out of 6 members Growth: • RBI projected the GDP growth for FY25 at 7% • Quarterly break-up is projected at 7.1% in Q1, 6.9% in Q2 and 7% in Q3 and Q4 Inflation: • Assuming a normal monsoon, the RBI has projected that CPI inflation for FY25 will be at 4.5%. • On a quarterly basis, CPI inflation is expected to be 4.9% in Q1, 3.8% in Q2, 4.6% in Q3, and 4.5% in Q4 Liquidity: • Liquidity conditions improved during February and March, in the wake of increased government spending • WACR hovered near the repo rate since last policy meeting • RBI will conduct more VRRR auctions in April due to the surplus liquidity in the system • Monetary transmission continues to be work in progress • Rupee was the most stable among major currencies in FY24 Current Account Deficit: • India’s current account deficit narrowed significantly on account of a moderation in merchandise trade deficit, coupled with robust growth in services exports and strong remittances • ECBs and NRI deposits recorded higher net inflows vis-a-vis previous year • Forex reserves reached an all time high of $645.6 billion as of March 29, 2024 • India continues to be the receiver of the largest remittances in the world and the cost of receiving remittances is also coming down Other announcements: • Introduction of a mobile app to access RBI’s retail direct scheme for participation in G-Sec market. • Scheme for trading of sovereign green bonds at IFSC to be announced • Undertaking a comprehensive review of LCR framework for banks; draft circular to be issued shortly • Dealing in rupee interest rate derivative products for all small finance banks • Propose to facilitate deposit of cash in Cash Deposit Machines using UPI • UPI access for pre-paid instruments for third party apps – propose to permit using of TPAPs for making UPI payments from PPI wallets • Distribution of CBDC through non-bank payment system operators

FLAWED STANCE by the RBI - interpreting data undercurrents founded on data fidelity is obviously not really the cup of tea for the economists in the MPC Following are the major deterrents for potentially six or eight quarters beginning hereon: DETERRENT 1: QE and artificially injected liquidity in the system as is interpreted by the ever increasing price of the bullion. this has been relentless and we are heading for Zimbabwe - like or Argentina - like bust within the next three quarters! DETERRENT 2: Gaming of the capital markets by the operators and sundry small investors! almost like " khelo India khelo" or the IPL dream 11 winnings! bad business and worse off financials! this gaming will lead to serious contagion defaults within the ever evolving fragile financial system DETERRENT 3: Rock bottom real incomes, depleted savings, unprecedented reliance on gold loans by households to resolve evergreening initiatives to stay afloat the corporate way and am enormous backlog of largely unserviceable private debt! DETERRENT 4: Corporate earnings, capacities to form capital at acceptable efficiencies and general financing of capex organically are way beyond the corporate ministrations and capabilities. consequently, public wealth shall continue to be destroyed with burgeoning corporate debt that will irrevocably convert into NPAs; primarily hidden and then eventually manifested. corporate India is largely on the wrong footing with no light at the end of the tunnel DETERRENT 5: Employment woes will worsen and the borrowing binge following rate cuts shall wipe out the corporate credentials even more powerfully! when shall the MPC learn to comprehend stagflation and the elements within the phenomenon? in all likelihood never! and the brinkmanship will continue forever more! https://lnkd.in/dZ4-6Ybp