The Reserve Bank of India surprised the banks by declaring the banks to raise cash by reducing interest rates higher than expected and needed to raise cash to banks. Nevertheless, at the same time, he only made the policy role back after a meeting, a relatively rounded signal on future prices cut. Malhotra – Who has been in this role for six months now – at that time, “There is a very limited place to support growth”.
If taken together, this message is a “somewhat confusing policy signal”, said Priyanka Kishore, chief economist in Asia in Singapore. “Lack of clarity is likely to probably obstruct the effective transition of interest rate deduction, which reduces policy objectives.”
Malhotra is trying to boost the growth in the last financial year. Yet despite the three rates under the new governor, customers and businesses refrain from taking out loans, so banks have been motivated to park more cash instead of paying that cash.
Bloomburg
The Central Bank did not respond to the email seeking comment.
The recent liquidity steps taken by the RBI also appear to be contradictory to some analysts. Despite the maximum amount of funds in the market, the RBI has reduced the bank’s cash reserves in the last week – from September to the banking system. tr trillion will be pumped ($ 9.2 billion).
On Monday, the RBI announced that it would close the liquid injection daily, which would prove that the central bank will actively withdraw the maximum amount of money from the market.
Sonal Verma, Chief Economist of Asia Japan at Nomura Holdings Limited in Singapore, said last week after the RBI’s strategic decision, “The need for using a CRR like CRR is unclear.” RBI movements caused volatility in the bond of bonds, and motivated two state-run companies to disrupt their plans to sell rupee-named loans. After the release of 4-5 base points on Friday, the average income on three-rated three and five years of corporate loans this week increased by eight base points and nine base points, respectively.
Debt increase
The CRR cut has already reported Rs 9.5 trillion in the banking system since January. With the rest of the credit demand, banks are parking extra funds to the RBI rather than raising debt.
By June 10, the banks had deposited Rs 2.7 trillion at the central bank’s overnight facility. Meanwhile, according to RBI data, India’s debt growth has dropped below 10% for the first time last month.
Additional funds in the system have dragged rates on safe money market instruments, below 5.5% of the RBI policy rate and less than the central bank interest rate floor.
Bond Trading Firm, ICICI Securities Primary Dealership Ltd. The Chief Economist here is A. Prasanna said that under Malhotra, the new monetary policy committee has used the strategic role as a tool for the forwarding guidance on interest rates. In the past, the role of RBI was represented in this role in the role of liquidation, interest rate, money supply and credit conditions, he said.
“We have no habit of such a guidance, so depending on the expectations of the policy, it may be confusing for the participants in the market,” Prasanna said.
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