SBI to deploy 2,000 bankers to target India's wealthy, ups game against rivals
SBI, which boasts over 22,500 branches across India, is stepping up its game amidst stiff competition from both global players like HSBC and Barclays and local firms such as 360 One WAM Ltd., ICICI Bank, and Axis Bank. Key Points
Business TodayRBI Policy Rate: No tango with repo, yet RBI moves ease rates
The Reserve Bank of India (RBI) has indirectly eased policy rates through consistent liquidity injections, leading to a decline in the weighted average call rate (WACR) towards the benchmark repo rate. This trend reflects increased confidence in liquidity management strategies, supported by government spending and proactive RBI operations. Analysts suggest a shift towards containing inflation while maintaining stable borrowing costs. Key Points
Economic TimesET Explainer: The RBI's liquidity stance and its effect
The Reserve Bank of India's liquidity stance is not convincing experts. It follows a corridor liquidity management system with repo rate as the ceiling and reverse repo rate as the floor. Factors causing tight liquidity include withdrawal of accommodative stance, credit growth surpassing deposit growth, fund constraints, slower government spending, and Ukraine war impacting forex reserves. Key Points
Economic TimesRBI may allow $5b sell-buy swap to mature on Monday, to inject Rs 40,000 crore
The Reserve Bank of India spurs capital inflows to support banking system liquidity. They manage liquidity strain from tax payments through foreign exchange market actions, repo operations, liquidity surplus, and dollar deliveries. Key Points
Economic TimesIndia can move in direction of providing guidance on liquidity, says MPC’s Ashima Goyal
Indian policymakers can follow the US Federal Reserve's guidance on liquidity conditions to mitigate market shocks, according to Ashima Goyal, a member of the Monetary Policy Committee. The US Fed Committee provides guidance on liquidity, which is crucial in many inflation targeting countries. India can also move in this direction as markets mature and deepen, making shocks less impactful. Key Points
Economic Times
liquidity deficit tightening financial conditions: CRISIL
Financial conditions have tightened the economy with liquidity going into a deeper deficit putting upward pressure on short-term rates, according to a research report by CRISIL Market Intelligence and Analytics. The report released during the month also said that foreign portfolio investors turned net sellers further aggravating the tight liquidity conditions. Key Points
Economic TimesView: China’s glut, India’s drought. Two faces of liquidity
The liquidity drought may be deliberate. Unlike Beijing, New Delhi has every reason to be sanguine about growth. A 7%-plus rate of economic expansion gives it breathing room to slay inflation before embarking on a fresh investment spree after the polls. Unless the Modi government surprises analysts by announcing a populist spending program in its Feb. 1 budget, the reasonable assumption is that its angling for an upgrade to its sovereign rating, which is perched at the lowest rung of investment grade. Meanwhile, the monetary authority is seeking to buttress its credibility as an inflation fighter. Key Points
Economic TimesMoody's downgrades Vedanta as bond restructuring gets investor nod
Vedanta Resources had last week received investor consent to restructure about $3.8 billion of its outstanding corporate bonds. Moody’s said the company is likely to face material liquidity issues over the coming 24 months and the risk of default risk remains high Key Points
mintRBI may not have to drain cash further as core liquidity declines
At ₹2.23 lakh crore as on December 15, the core liquidity has declined sharply from the peak surplus of ₹12 lakh crore from September to October of 2021 during the post-Covid phase in which the RBI had infused large amounts of funds into the banking system to ensure flow of credit to productive sectors during the crisis, analysts said. Key Points
Economic TimesIndian banks' liquidity deficit at near 8-year high
The Indian banking system is grappling with a widening liquidity deficit, prompting the Reserve Bank of India (RBI) to conduct a seven-day variable rate repo (VRR) auction, injecting Rs 1 lakh crore into the market. Another VRR auction is anticipated, given liquidity constraints due to advance tax payments and goods and service taxes. Key Points
Economic Times
As durable liquidity reduces, RBI’s tone suggests tolerance of easing overnight rates
The Reserve Bank of India (RBI) may ease overnight money market rates next month, as it tolerates government spending funds as long as durable liquidity reduces, in line with its inflation targeting aim. If government spending picks up in Q4 and system liquidity improves, overnight rates could fall back towards the Repo rate. Key Points
Economic TimesFed decision key for Indian rupee, while bonds also await OMO sales
By Dharamraj Dhutia and Nimesh Vora MUMBAI (Reuters) - The Indian rupee and government bonds will react to the U.S. Federal Reserve's policy outcome this week, along with data that will provide cues Key Points
ThePrintRBI to call out liquidity skew with bankers
An email sent to the RBI seeking comment for the story remained unanswered till press time. In an unexpected step, RBI Governor Shaktikanta Das said on October 6 that the central bank would hold open market bond sales to drain out excess liquidity in the banking system. The yield on the 10-year benchmark government bond has since climbed as much as 16 basis points to a seven-month high of 7.38%, inflating borrowing costs for the Centre, and corporates. Key Points
Economic TimesRBI may opt to roll over $5-b forex swap
The Reserve Bank of India (RBI) is considering rolling over a $5 billion foreign exchange swap set to mature next week in order to prioritize liquidity management over bolstering forex reserves. Some investors believe that allowing the swap to mature could lead to an inflow of around ₹40,000 crore in the banking system, but others argue that the RBI should focus on battling inflation. The RBI's decision may also be influenced by its desire to augment reserves as it collects $5 billion back from banks. Key Points
Economic TimesRBI could extend incremental CRR to rein in liquidity
The RBI may not increase the repo rate as it ascertains the durability of high food prices while seeing the impact of previous rate hikes work their way through the economy, which faces threats from a weak external environment. The central bank can, however, bolster transmission of its policy actions and prevent borrowing costs from turning cheaper by keeping a tight leash on banking system liquidity. Key Points
Economic Times
RBI monetary policy: The liquidity lever may prove to be better price tamer
Whenever monetary authorities wanted to influence price levels for goods and services, they resorted to the popular tool — interest rates that make money more expensive or affordable. If inflation climbs, they raise the interest rate to dampen demand, and if growth slows, they reduce the cost of funds to fuel demand. Key Points
Economic TimesRBI asks banks to set aside incremental CRR
The Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday directed banks to set aside a larger part of incremental deposits under cash reserve ratio (CRR) to tighten liquidity in the near term. The remark from Das came while he was announcing key decisions of the Monetary Policy Committee (MPC) meeting held from August 8-10. Key Points
Economic TimesRBI may tighten cash conditions, but CRR hike unlikely- Traders
The Reserve Bank of India may look to tighten domestic rupee liquidity to quell inflationary pressures but will refrain from permanent cash withdrawal, several traders and analysts said ahead of Thursday's monetary policy review. The central bank is expected to hold policy rates steady but could turn more hawkish given that inflation in July is likely to have risen above its comfort band. Key Points
Economic Times‘System liquidity appears to be skewed in favour of some banks’
RBI has been conducting various rate reverse repo auctions to suck out surplus liquidity after the withdrawal of the ₹2,000 notes amounting to ₹3.62 trillion and dividend payout by the RBI to the government of ₹87,416 crore. Key Points
mintSurplus liquidity of banks may dip on tax outflows, higher currency demand
The net liquidity in the banking system, as represented by the amount of money absorbed by the Reserve Bank of India (RBI) from the system, jumped to Rs 2.59 lakh crore on June 4 from Rs 47,484 crore on May 22. Key Points
The Indian Express
Bankers await signs on Reserve Bank of India's liquidity approach amid persisting disconnect
The Reserve Bank of Indias policy review will be monitored for any hints over how it approaches liquidity, despite policy interest rates remaining the same. Local banks have been apprehensive parking their surplus liquidity with the central bank over the long term, despite the fact that it could serve to reduce inflation risks. On Monday, the RBI auctioned INR1tn ($15.3bn) via a four-day variable-rate reverse repo auction, but it was not fully subscribed. Key Points
Economic TimesRBI may revisit its toolkit to manage liquidity at banks after sudden surge
A higher-than-budgeted surplus transfer by the RBI to the government, and the central bank's move to withdraw ₹2,000 notes from circulation have substantially altered the liquidity landscape for the banking system. Both announcements, made one after the other by the RBI on Friday evening, will result in an improvement in banking system liquidity, albeit in different ways. Key Points
Economic TimesIndian bond yields seen lower after RBI’s currency move to aid liquidity, debt buy
The 10-year benchmark 7.26% 2033 bond yield is expected to be in the 6.95% to 7.01% range after closing at 7.0106% in the previous session. Key Points
FinancialexpressStubborn cash squeeze risks derailing India’s economic recovery
The funding squeeze indicates a clogged-up financial system that is starting to hurt appetite for bonds and further raising financing costs just as the RBI has paused monetary tightening amid easing price pressures. But economists say the situation may linger for a while, with the central bank still determined to fight inflation and expected to offer short-term liquidity relief only. Key Points
Economic TimesBanks flag high overnight rates, liquidity terms
Indian banks have urged the Reserve Bank of India (RBI) to find a more even-handed way to distribute liquidity and narrow the gap between overnight rates and the benchmark policy rate. Due to 24/7 banking, banks have held on to cash at the RBI's Standing Deposit Facility (SDF), increasing the call rate in the call money market, where banks can make overnight financing arrangements. For around a month, the weighted average call rate (WACR) has been around 25 basis points higher than the benchmark policy repo rate, which is currently at 6.50%. The WACR peaked at 6.78% on 15 June. Key Points
Economic Times
With crises behind, will RBI dust off the liquidity framework?
Since the last MPC meeting in February, global financial markets have come full circle. Traders' bets have swung like a pendulum - from monetary easing to overcome an economic recession, to tightening to fight against inflation, and finally to easing for the sake of financial stability. All of that occurred in a matter of four months. Key Points
Economic TimesWhy a US debt deal may only provide short-term relief for markets
The tentative deal between President Biden and Kevin McCarthy to raise the US debt ceiling may have negative consequences for financial markets. Once the deal has passed, the government is expected to make large bond issuances, which could lead to a liquidity drain from banks and cause financing to become more expensive for companies already struggling in a high-interest rate environment. Some banks fear that markets have not yet accounted for this risk, and some warn that delaying the resolution could cause volatility in the market. However, some believe that the drain on liquidity could be absorbed by money market mutual funds. Key Points
Economic TimesMPC to opt for pause
At its meeting on June 8, the Reserve Bank of India's (RBI) monetary policy committee (MPC) will likely vote to keep its benchmark repo rate unchanged at 6.50%, 14 economists polled by FE said. Key Points
FinancialexpressRBI doesn't want surplus money from banks but that can go to fellow peers
The head of the Reserve Bank of India (RBI) has urged banks to lend their surplus funds to their peers rather than depositing them at a central bank facility. Shaktikanta Das stated that it is more desirable for banks to explore lending opportunities in the interbank call market, rather than passively parking funds in the standing deposit facility at less attractive rates. The Indian banking system has been facing a liquidity deficit, and Das believes that greater volume of call money transactions would help deepen the interbank money market and lower the reliance on the marginal standing facility. Key Points
Economic TimesIndia's banking system faces record liquidity deficit
The deficit widened to 3.34 trillion rupees ($40.18 billion) as on Jan. 23, nearly tripling from the start of the month, data from the Reserve Bank of India (RBI) showed. Key Points
ThePrint
RBI to meet banks next week, liquidity to be discussed
The Reserve Bank of India (RBI) plans to meet with officials from various banks to discuss the liquidity conditions in the banking system. The meeting, which will include state-run, foreign, and private banks, comes after the RBI Governor urged banks to lend in the inter-bank market rather than parking funds at the standing deposit facility. Key Points
Economic TimesECB’s push to raise borrowing costs runs up against wall of cash
Excess liquidity is at a two-month high of more than €4.1 trillion ($4.5 trillion), up almost 3% since the start of the month, ECB data show. Key Points
FinancialexpressStandard Chartered CEO says big US recession unlikely
The "reactive response in the U.S. was perfect," effectively stemming the crisis, he said, adding the ideal would have been to provide liquidity to "challenged banks" ahead of time. Key Points
FinancialexpressRBI to hold 14-day variable rate repo auction for Rs 1 lakh crore on Friday
This will be only the second VRR auction conducted by the RBI since February 2020. The previous VRR auction was conducted on Feb. 10 for Rs 50,000 crore. Key Points
Economic TimesSix-week long election leaves RBI with liquidity dilemma
Voting in India's national elections began on April 19 and will conclude on June 1, with counting on June 4. Typically, government spending slows during polls and picks up only after a new government is in place and a budget is presented. Key Points
Economic Times
Lending rates to start easing only in second half of FY'25: Report
Bank deposit rates are unlikely to rise further. But the structural shift in the system will keep downward rigidity intact. Hence, banks lending rate is expected to remain high in FY25 with some modest softening towards the end. Key Points
Economic TimesRBI's repo sees strong demand, traders eye more cash infusion in Q4
Shortage of funds will only get exaggerated in the last quarter (of the fiscal year), which ideally also sees the strongest credit growth, a senior treasury official at a private bank said. We expect frequency of such repos to increase. Key Points
Economic TimesRBI Policy: Repo rate left unchanged at 6.50%, but D-Street hit by incremental CRR on banks
While the policy stance was on the expected lines, the RBIs decision to impose an incremental Cash Reserve Ratio (CRR) of 10% of NDTL on banks dampened Dalal Streets mood. The incremental CRR has been imposed for May 19-July 28 period, and the RBI will review the same on September 8, Das said, adding that the move is “purely” a temporary measure. Key Points
Economic TimesExpect non-interest rate measures from RBI this week
The Reserve Bank's MPC is expected to focus on non-interest rate measures and liquidity measures in its upcoming meeting. The government's lower-than-expected borrowing programme and decrease in fiscal deficit support long-end bond yields. RBI is likely to keep the policy repo rate unchanged and continue with hawkish guidance. Inflation expectations may be managed through liquidity measures. Key Points
Economic TimesFed and banks can do more to reduce liquidity risk -Logan
Dallas Federal Reserve Bank President Lorie Logan on Friday defended the U.S. central bank's "ample reserves" approach to monetary policy implementation, even as she outlined a number of ways that both the Fed and banks could further shrink liquidity risks in the financial system. Key Points
Reuters
MPC meeting: RBI may hit rate pause button again this week
According to an ET poll with 16 respondents, the six-member rate-setting panel is seen maintaining the benchmark policy repo rate at 6.50% during the June 6-8 meeting, marking the second consecutive instance of it holding off on policy tightening. The respondents were unanimous in their expectation. Key Points
Economic TimesStock picks of the week: 4 stocks with consistent score improvement and upside potential of up to 41%
Once again everything is looking green, the way FY 25 has started, it appears that bulls were on short term break due to tight liquidity conditions which tends to appear in the last month of every financial year. While the local liquidity condition might improve, the issue of high valuation is still not over. It is still a time to be cautious in terms of not going overboard with taking exposure to a certain stock, selective about what one is buying. The reason, if the street becomes selective and gets into correction mode once again, it is stocks where there has been improvements in the business operating matrix will be able to weather the storm better. These selected stocks depict a strong upward trajectory in their overall average score which is based on five key pillars i.e. earnings, fundamentals, relative valuation, risk and price momentum. This implies that there has been a significant improvement in their market outlook in the given time frame. Key Points
Economic TimesIndia cenbank to meet banks next week, liquidity to be discussed - sources
The Reserve Bank of India is likely to meet senior officials from some banks on Nov. 2 and Nov. 3 to discuss the prevailing liquidity conditions in the banking system, seven treasury officials told Reuters on Thursday. Key Points
ReutersBanking system liquidity in deficit as incremental cash reserve ratio kicks in
Daily central bank data showed that the RBI injected funds worth ₹23,644.4 crore into the banking system on August 21, marking the first infusion of cash since March 27. An injection of funds by the RBI reflects deficit liquidity conditions in the banking system. Key Points
Economic TimesRBI draining liquidity signals its intent to quash inflation
RBI said Tuesday it will drain 750 billion rupees ($9.1 billion) from the banking system via a reverse repo auction. Key Points
Financialexpress
Incomplete transmissions & inflationary challenges, RBI drops hints for those reading into MPC’s stance
The Reserve Bank of India's Monetary Policy Committee (MPC) has maintained its stance and kept rates unchanged for the sixth consecutive meeting. Despite expectations for a change in policy stance due to easing core inflation and a fiscally prudent interim budget, the MPC opted to continue with the withdrawal of accommodation stance. Economists suggest the RBI may be hinting at delinking its stance with liquidity management. Bond yields initially dipped on expectations of a change in stance Key Points
Economic TimesGovt taking steps to cap food prices, curb rise in fiscal deficit: MPC member Ashima Goyal
According to Ashima Goyal, an external member of the Monetary Policy Committee, the recent surge in food prices is unlikely to cause general inflation. The government is taking measures to control food prices while also monitoring its fiscal deficit, she said. Goyal stated that the conditions that led to inflation in 2007-13, such as high food inflation and large fiscal deficits, are not present now. Key Points
Economic TimesRBI signals long pause, FY24 inflation forecast trimmed
The Monetary Policy Committee (MPC) of the Reserve Bank of India kept the benchmark repo rate unchanged at 6.50% and retained its tightening stance, signalling a longer timeframe for rate cuts. Key Points
FinancialexpressExplained: Why Indian banks are weary about parking large funds with RBI
Banks parked only 205 billion rupees at the reverse repo, even as the central bank cut down the quantum to 500 billion rupees from 2 trillion rupees on April 6. Banks had parked 1.24 trillion rupees at the time. Key Points
India TodayShort term rates hit 8% on tight liquidity
Yield on 12-month CP jumped by 13 basis points to 8.1% as on 5 December as compared to 7.97% as on 15 November Key Points
mint
liquidity surplus at 9-mth peak on high govt spend, FPI inflows
Typically, around 60% of government expenditure occurs in the first six months of a financial year. The Centre has earmarked Rs 10 lakh crore in the current fiscal for capex. Last fiscal, the government adopted a slower approach to capex spending until clarity emerged on its revenue streams, analysts said. According to analysts, it was likely that amid its large spending push, the government was currently availing of the WMA. Key Points
Economic TimesRBI delivers a Kapil Dev policy: Economists decode what's beyond the steadfast stance
The Reserve Bank of India (RBI) has decided to maintain the repo rate at 6.5% for the fourth consecutive time. The Monetary Policy Committee (MPC) remains focused on aligning inflation to the 4% target. The RBI may consider open market sales of bonds to manage liquidity conditions. Despite inflation and resilient economic conditions, the MPC has kept its inflation and GDP forecasts unchanged. Key Points
Economic TimesWatsa's company to put $200 million in IIFL Finance after RBI curbs
India Business News: Fairfax group commits up to $200 million liquidity support to IIFL Finance. RBI bars IIFL Finance from extending gold loans. JM Financial faces Sebi s Key Points
Times Of IndiaOn the road to disinflation, the last mile is the hardest
Five out of six committee members on Thursday voted to keep the policy repurchase rate unchanged at 6.5%, and stance unchanged at withdrawal of accommodation. Key Points
mintIndia 10-year bond yield sees biggest rise in 14 months on RBI’s OMO sales plan
“The timing and quantum of such operations will depend on the evolving liquidity conditions,” Das said. In the last policy meeting, RBI imposed an incremental cash reserve ratio (I-CRR) of 10%, which impounded about Rs 1.1 lakh crore from the banking system. The I-CRR was reviewed on September 8 and the central bank decided to discontinue the same in a phased manner, ending on October 7. Key Points
Economic Times
MPC Minutes: Excess liquidity on RBI radar
India's Consumer Price Index inflation surged to a 15-month high of 7.44% in July, shooting past the MPC's tolerance band of 2-6%. The MPC's inflation target is 4%. From mid-June to end-July, prices of tomatoes shot up nearly five times, with more than 80% of the rise occurring in the end of June and the first half of July, RBI executive director Rajiv Ranjan said. Key Points
Economic TimesCredit Suisse pays back some emergency liquidity, central bank data suggests
Sight deposits - cash held by commercial banks overnight with the SNB - fell by 31 billion Swiss francs ($34.3 billion)last week, data published by the central bank showed. The drop was the second-biggest weekly decline on record, second only to when the SNB started mopping up market liquidity after it quit negative interest rates last September. In recent weeks sight deposits have soared as Credit Suisse received emergency liquidity infusions to head off a bank run as nervous customers pulled out their cash. Key Points
Economic Times