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RBI Monetary Policy

Shri A. K. Das, Managing Director & CEO, Bank of India said, “Policy announcement represents a balanced approach to make economic revival deep rooted, ensure orderly development of financial market and keep price movement at manageable levels.”

“With Bond markets pricing in a status quo well in advance, MPC barely surprised in terms of accommodative stance. All the members of the MPC unanimously voted for no change in policy rates. The central bank reiterated its FY22 real GDP growth projection of +10.5%, while sees inflation trajectory to hover around 5% in H1 FY22. RBI vehemently articulated that that absorption of excess liquidity through reverse repo should not be construed as reversal of accommodative policy stance. RBI governor expressed the need for orderly evolution of yields and will initiate 1 trillion of OMOs during Q1 FY22 to combat extreme volatility. RBI’s liquidity support will certainly help in assuaging market apprehensions given that supply of G-Sec paper will remain elevated on the back of frontloading of market borrowing. For FY22 as a whole, OMO operations are expected to be above INR 3 trillion, similar to FY21 level. Possibility of inclusion of Indian G-secs in the global bond indices will also absorb the supply. Nevertheless, we expect 10year yields to inch higher, possibly trade in the range of 6.2-6.25% in the near term, as there are concerns over stubborn core inflation, resurgent COVID infections, renewed localized lockdowns and relatively higher sovereign yields in US.

Additional measures announced that are positive for smaller HFCs, NBFCs and MFIs were on-tap TLTRO scheme extended by 6 months and additional liquidity support of 500 billion to AIFIs. Key beneficiaries of these measures could be Can Fin, Repco, Home First, Shriram City and MFIs like CREDAG and Spandana.”

Views of Ms. Anagha Deodhar – Chief Economist, ICICI Securities on the RBI Monetary policy said, “The MPC’s decision to pause and maintain accommodative stance is along expected lines. However, it retained GDP growth projections for FY22 at 10.5% despite large stimulus in other countries and its potential impact on global growth. In this policy, the biggest announcement was GSAP 1.0 under which the RBI plans to buy government securities worth Rs 1trn in Q1FY22. Along with GSAP, the RBI also announced extension of several liquidity facilities. Together, these measures are aimed at keeping financial conditions benign, ensure orderly evolution of the yield curve and supporting the nascent recovery.”

Mr. Satish Gupta, MD & CEO of Paytm Payments Bank Ltd said, “The decision by the Reserve Bank of India to increase the limit on maximum end-of-day balance to ₹2 lakh for Payments Banks account holders is a welcome step and will enable us to cater to the growing needs of our customers. Similarly, the increase in the current limit on the outstanding balance in full KYC PPIs from ₹1 lakh to ₹2 lakh will incentivize migration to full KYC PPIs which will further bring financial inclusion across the country. We support an open and interoperable digital payments ecosystem and are looking forward to the detailed guidelines on this subject.”

RBI on increasing the maximum balance limit for Payment Banks to Rs 2 Lakh,
MD and CEO of Paytm Payments Bank, Mr. Satish Gupta

Satish Gupta, MD & CEO of Paytm Payments Bank Ltd said, “The decision by the Reserve Bank of India to increase the limit on maximum end-of-day balance to ₹2 lakh for Payments Banks account holders is a welcome step and will enable us to cater to the growing needs of our customers. Similarly, the increase in the current limit on the outstanding balance in full KYC PPIs from ₹1 lakh to ₹2 lakh will incentivize migration to full KYC PPIs which will further bring financial inclusion across the country. We support an open and interoperable digital payments ecosystem and are looking forward to the detailed guidelines on this subject.”

       

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