Exiting the Easy Money Circle
The RBI adopted multiple regulatory forbearance measures and ultra-loose monetary policy to counter economic headwinds. Now it has to work out an exit roadmap
Illustration by Raj Verma
More than a decade after the global financial crisis, the exit from an ultra-loose monetary policy - such as near-zero interest rates and helicopter money - in the US is still a work in progress. The US Federal Reserve s balance sheet has expanded from under $1 trillion before 2008 to $4.5 trillion in the aftermath of the financial meltdown. The Covid outbreak has further pushed the unwinding as the Fed s balance sheet is expected to jump to 50 per cent of the country s GDP from the current 34 per cent. The eventual exit would mean liquidity tightening and higher interest rates in the US, which would have implications for emerging markets, including India, by way of dollar outflows from stock market and currency depreciation.
Commercial banks in India gave almost one fourth of loans (about Rs 1.55 trillion) in the last fortnight of the financial year, reflecting a surge in year-end activity. The total lending was Rs 5.80 trillion in Fy21 lower than about Rs six trillion in Fy20. The outstanding credit stood at Rs 109.51 trillion as of March 26, 2021, according to Reserve Bank of India data. On a year-on-year basis, the lending by commercial banks rose by 5.6 per cent in the financial year (Fy21), a period marked by economic contraction due to COVID-19 pandemic as against 6.1 per cent in Fy20. As a for deposits, it was a year of bounty for banks. The deposits rose by 11.4 per cent (Rs 15.45 trillion) in Fy21, higher than 7.9 per cent (Rs 9.93 trillion) in Fy20. The outstanding deposits stood at Rs 151.13 trillion as on March 26, 2021.
RBI s MPC keeps key lending rates unchanged; maintains accommodative stance
RBI Governor Shaktikanta Das says MPC kept its estimate for economic growth unchanged at 10.5 per cent for FY22. MPC also saw inflation edging up to 5.2 per cent in first half of new fiscal from 5% in January-March period and moderate to 4.4 per cent in Q3
BusinessToday.In | April 7, 2021 | Updated 11:46 IST
RBI Governor Shaktikanta Das
The Reserve Bank of India on Wednesday announced key lending rates while keeping interest rates unchanged and maintained an accommodative stance as the economy faces a renewed threat to growth due to the resurgence of coronavirus cases. The central bank also kept the benchmark repurchase rate unchanged at 4 per cent and maintained an accommodative policy stance to support growth.
Weekly Rupee view: 74 is the crucial level to watch
×
If the 74-level is breached, INR will touch 74.50 and could even depreciate to 74.75 in the near term.
BL Research Bureau
The rupee (INR) was trading with a bearish bias over the past week against the dollar (USD). Following the monetary policy announcement of the Reserve Bank of India (RBI) today, the domestic currency depreciated and is now trading near 74 versus the greenback. Thus, the year-to-date loss of INR against USD currently stands at about 1.3 per cent. Nevertheless, the rupee remains one of the best performing Asian currencies for the year so far.
MSME: Ways for MSMEs to emerge stronger after the Covid pandemic indiatimes.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from indiatimes.com Daily Mail and Mail on Sunday newspapers.