Key Points
The Reserve Bank of India is expected to ease liquidity conditions in FY'2024-25, but its impact on lending rates would be seen only in the second half of the fosca; 2024-25, India Ratings said in its outlook for FY' 2024-25...
While fiscal and regulatory tightening will continue, monetary conditions starting with the banking system liquidity beginning to ease said Soumyajit Niyogi, Director Core Analytical Group..
However, the overall lending rates are likely to remain elevated and easing, if any, will be visible only from 2HFY25 ...
On the other hand, regulatory tightening and pricing dynamics in the capital market suggest the prevailing rates will continue and any decline in risk-free rates will be compensated by an increase in credit premium by widening of the credit spread and term structure, the ratings firm said..
But long term yields in the banking system and bond markets would remain broadly at an elevated level,it said.. Given the expectation of limited supply of bonds and higher demand from investors, IndRa expects bond issues to be higher in FY25 than in FY24...
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