RBI Moves Unlikely To Ease Pain For Struggling Shadow Banks

RBI Cuts Repo Rate by 35 bps To Help Boost Economic Growth

The statement further announced that the RBI has chose to raise a bank's exposure limit to a single NBFC to 20 per cent of Tier-I capital of the bank.

The 35 basis point rate cut is "a signal that the Reserve Bank of India's MPC is quite concerned with the growth outlook", said Suvodeep Rakshit, a senior economist with Kotak Institutional Equities in Mumbai. "Construction activity indicators slackened, with contraction in cement production and slower growth in finished steel consumption in June", RBI said in a statement.

RBI Governor Shaktikanta Das said the financial markets have fully absorbed the past three rate cuts.

Four members (Ravindra H Dholakia, Michael Debabrata Patra, Bibhu Prasad Kanungo and Shaktikanta Das) voted to reduce the policy repo rate by 35 basis points, while two members (Chetan Ghate and Pami Dua) voted to reduce the policy repo rate by 25 basis points.

Das said the recent rate cuts in tandem with anticipated government moves should lift sluggish economic growth.

Global economy slows down: The MPC noted that global economic activity has slowed since the meeting of the MPC in June 2019, amidst elevated trade tensions and geo-political uncertainty.

J&K (Reorganisation) Bill 2019: How parties voted to bifurcate state
Two of the three wars India and Pakistan have fought since their independence from British rule have been over Kashmir. Gul Panag has welcomed the governments decision of scrapping Article 370, calling it an "incredibly bold move".

A fall in domestic demand lowered India's growth rate in the last quarter to 5.8 percent, with unemployment at its highest since the 1970s. "I have had meetings with both public and private sector banks and the system is today.flush with liquidity", Das told reporters here, after the Monetary Policy Committee's (MPC) meet.

CPI inflation is projected at 3.1 per cent for Q2 FY20 and 3.5-3.7 per cent for H2 FY20, said RBI.

"Banks and financial institutions have become so risk-averse that they just aren't keen on increasing their exposure to NBFCs right now, so even though the measures are positive the scenario is unlikely to change until the economic environment improves", said the finance head of one NBFC, who asked not to be named as he was not authorized to discuss the matter with the media.

It can be noted that a slew of industry leaders, including engineering giant L&T chairman AM Naik and Godrej Group chairman Adi Godrej have of late expressed disappointment on the economy and called for more measures to revive growth with faster decision making and ensuring communal harmony.

With a 35 basis points cut in interest rates, it is highly likely that banks would reduce interest rates on home loans, vehicle loans, auto loans etc. Overall, banks reduced their WALR (weighted average lending rates) on fresh rupee loans by 29 bps during the current easing phase so far (February-June 2019), the statement added.

Related News:



Most liked

Apple, Goldman Sachs start issuing Apple Cards to consumers
You can apply in Apple Wallet and if approved by Goldman Sachs (a process that takes seconds), it's instantly available for use. Prior to the physical card arriving, you can use Apple Card via Apple Pay to make purchases in retail stores or online.

Mexico: Texas shooting 'act of terrorism' against Mexicans
The massacre on Saturday was one of at least three mass shootings to kill and maim residents across the USA in the past week. A top official with the Mexican government announced that the nation will sue the United States under global law.

Britain Will Join US in Gulf Naval Mission
Guards boats were patrolling the Gulf to control traffic and detect illicit trade, it said, without identifying the seized vessel. Last month Britain proposed a European-led maritime protection force, but European countries have been reluctant to join.

Democrats target Donald Trump rhetoric after deadly mass shootings
Earlier Sunday, Trump tweeted, "God bless the people of El Paso Texas". Trump ordered flags at half-staff in honor of the victims. The gunman was shot to death by responding officers.

Hong Kong police make fresh arrests, city braces for further protests
The police released a statement at 2.45pm saying that Tsuen Wan Police Station has temporarily suspended its report room services. Hong Kong police have called on the public to stick to designated routes and times for a spate of protests planned this weekend.

Stocks get hammered as trade war heats up
Citing unnamed sources, Bloomberg reported earlier on Monday that China has asked state firms to halt USA agriculture imports. This might be a knee-jerk response as the Renminbi falls beneath its $0.14 floor for the first time in eleven years.

Time gets trippy in Fortnite Season X which is out now
When the sphere activated, a massive energy pulse enveloped the map... which apparently really messed up the timeline. Why? The difference is small, but force you to complete several stages before moving onto the next set of missions .

Liverpool to sign former West Ham goalkeeper Adrian following Simon Mignolet exit
The 32-year-old made 125 Premier League appearances for West Ham during his time in the East End. Here, Liverpool have signed Adrian...

Moscow Police Arrest 800 During Local Election Protests
She has been on hunger strike for 21 days, and called on others to join the unsanctioned protest on Saturday. Authorities say opposition candidates failed to collect enough genuine signatures to register.

Blink-182 Was ''Locked Down'' in Hotel Following the El Paso Shooting
Surveillance video showed the suspect entering the store with a rifle while wearing ear protectors and camouflage trousers . Greg Abbott called the incident in the Texas border city "one of the most deadly days in the history of Texas".

10 killed including gunman in Dayton mass shooting, hours after Texas massacre
"The shooter was able to kill nine people and injure 26 in less than a minute", Whaley said during a news conference Sunday. We'll no doubt be receiving updates throughout the day, but this attack seems to fall into a pattern with others we've seen.

Boston Celtics rumors: National Basketball Association 2019 Christmas schedule includes Toronto Raptors vs. Celtics
But according to Shams Charania of The Athletic , the league is expected to go in a slightly different direction this year. Toronto will be entering this season without superstar forward Kawhi Leonard after losing him in free agency.

Argentina star Lionel Messi banned for three months after corruption claim
He has also been fined $50,000 by CONMEBOL and will miss Argentina's friendly encounters vs Chile , Mexico and Germany . Messi also said the competition was "set up" for eventual champions Brazil to win.

Dortmund down toothless Bayern to win German Super Cup
But, he's admitted that the decision is out of his hands, and it's up the player whether he wants to stay or move back to Germany. Leroy Sane of is closed down by Theo Walcott during the Premier League match between Everton FC and Manchester City .

Arsenal confirm signing of Nicolas Pepe from Lille
Meanwhile, Arsenal will continue their pre-season preparations on Sunday when they play Barcelona at Camp Nou on Sunday at 7pm. Now, Italian club Napoli are reportedly interested in signing the winger, who previously played for Manchester United.