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Bank credit rises 5 33% to Rs 108 89 lakh cr; deposits grow 10 94%
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Bank credit grows 5 33%; deposits rise 10 94%
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Unfavourable conditions for the rupee
Akhil Nallamuthu
BL Research Bureau |
Updated on
April 15, 2021
The local currency might fall to 75.60 against the dollar in near-term Liquidity measures like G-SAP (G-sec acquisition programme) and the extension of TLTRO (Targeted Long Term Repo Operations) announced by the Reserve Bank of India last week ignited the bearish sentiment in the rupee (INR). As a result, the domestic currency slipped below the important base of 75 and is now trading around 75.20 versus the dollar (USD). The year-to-date loss stands at about 2.9 per cent.
Inflation tightens Adding to the pressure on the rupee, inflation has seen an uptick in March. As per the government data, the Consumer Price Index (CPI) based inflation in March stood at 5.52 per cent. While it is lower compared to 5.91 per cent recorded in the same month last year, sequentially it has seen a rise as the inflation rate was 5.03 per cent in February. This is largely due to an increase i
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.
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