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Mint
a day ago
- Business
- Mint
Governor Sanjay Malhotra reveals why RBI is concerned about cryptocurrencies: ‘Can hamper…'
RBI MPC: Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday said that the central bank is 'concerned' about cryptocurrencies as they can 'hamper' financial stability of the country. Speaking to reporters during an interaction after announcing the RBI MPC decisions, Sanjay Malhotra touched upon the topic of cryptocurrencies. He was asked about them in the backdrop of the Supreme Court's observation on crypto currency last month. Malhotra said that there has been no new development on cryptocurrencies. 'There is no new development as far as crypto is concerned. A committee of the government is looking after this.' 'Of course, as you are aware, we are concerned about crypto because that can hamper financial stability and monetary policy,' Malhotra said. The Supreme Court in an observation on May 19 asked the Centre why it is not making a clear cut policy on cryptocurrency. 'Why does Centre not come out with a clear cut policy on regulating cryptocurrency,' a bench of Justices Surya Kant and N Kotiswar Singh asked. The remarks from the Supreme Court came when it was hearing a bail plea of an accused who was held for illegal Bitcoin trade in Gujarat. The accused, Shailesh Babulal Bhatt, had moved top court for bail. The SC termed Bitcoin trade as an illicit trade more or less like "hawala" business. On May 5, the top court said trading in Bitcoin in India was like "dealing with a refined way of Hawala business" as it lamented the Centre's inability to come up with a clear regime on regulating virtual currency so far. India is currently working on a discussion paper for cryptocurrencies and an inter-ministerial group (IMG), comprising officials from RBI, Sebi and finance ministry, is looking into global norms. In absence of any regulation, cryptocurrency is not yet illegal in India. The discussion paper will give the stakeholders an opportunity to give their views before India decides on its policy stance on cryptocurrencies. In 2022, the government announced a flat 30 per cent tax on gains arising from cryptocurrencies. Taxing income from cryptocurrencies does not necessarily and explicitly legalise cryptocurrencies. Currently, crypto assets are unregulated in India.
Mint
a day ago
- Business
- Mint
RBI MPC meeting: 5 things that senior citizens should do THIS month for higher returns
RBI MPC meeting: The RBI Governor, Sanjay Malhotra, declared the higher-than-expected repo rate cut after three days of the RBI MPC meeting. This move will hit bank fixed deposit (FD) interest rates across tenors. As bank FD is a traditional investment option for senior citizens, this RBI repo rate cut is expected to hit the return on bank FD. According to tax and investment experts, it would take time for the Indian banks to pass on the repo rate cut benefit to loan applicants. They advised senior citizens planning to open a bank FD account to open it immediately and avail of the higher returns on their bank FDs. They also suggested senior citizens go for time deposits in post office small savings schemes or senior citizens saving schemes, where they can get higher than bank FD returns in the medium to long term. They also advised them to go for PSU bonds and debt mutual funds. On how the RBI MPC meeting outcome would impact bank FD returns of senior citizens, Pankaj Mathpal of Optima Money Managers said, "The repo rate cut is going to affect FD rates negatively as banks would cut FD rates across tenors once they pass on this repo rate cut decision to their customers. So, senior citizens and other bank FD investors are advised to book a bank FD account now, as a change in bank FD rates doesn't impact old bank FD accounts. If they fail to take this opportunity, they can look at time deposits in the post office small savings schemes." On the top five options that senior citizens should do immediately or by the end of June 2025, Pankaj Mathpal said, 'Senior Citizens planning to open a bank FD account in the near-term are advised to book a bank FD account before the bank passes on this rate cut benefit to their customers. If they fail to do this, they should look at time deposit schemes of post-office, senior citizens saving scheme, PSU bonds, and debt mutual funds.' 1] Book bank FD account immediately: "As it would take time for the Indian banks to pass on the rate cut benefit to its customers, senior citizens and other bank FD investors are advised to book a bank FD account now, as a change in bank FD rates doesn't impact old bank FD accounts," said Pankaj Mathpal. 2] Time deposit in the post office: "Time deposit comes under the government of India backed-small savings scheme, and its interest rate doesn't change with the change in bank FDs. It changes every quarter quarterly, and hence, any post office time deposit change can be expected in the July to September 2025 review. So, suppose a senior citizen opens a time deposit account in the post office, which has the same investment model available in banks' FDs. In that case, they can expect a higher yield on one's money than bank fixed deposits," said SEBI registered Jitendra Solanki. 3] Senior Citizen Savings Scheme: "This is also an option that a senior citizen can look at in June as the government may also consider decreasing the low savings schemes' interest rate in the next quarter amid the lowering interest rate regime. Suppose a senior citizen opens a senior citizen's savings account in June. In that case, it will continue to yield a higher yield on one's money even if the central government decides to decrease the interest rate of a senior citizens savings scheme," said Jitendra Solanki. 4] PSU bonds: "Amid lowering interest rates, banks are expected to witness lower deposits in upcoming quarters. In that scenario, banks will have to look at other options to generate funds to meet the rising demand for lending. So, bank bonds are expected to flood. Hence, senior citizens are advised to look at PSU bonds as they are safer than corporate bonds. A corporate bond yields around 8 per cent in the medium term, while a PSU bond yields around 6.50 per cent to 7 per cent, which is still higher than bank FD interest rates," said Jitendra Solanki. 5] Debt mutual funds: "Debt funds are also considered a safe bet, which senior citizens can look at. It also yields around 7.50 per cent to 8 per cent in the medium to long term. So, senior citizens looking for bank FDs for the long term are advised to look at PSU bonds in the wake of RBI's repo rate cut and its impact on bank FD interest rates," said Jitendra Solanki. Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
Mint
a day ago
- Business
- Mint
RBI Monetary Policy: Governor Sanjay Malhotra delivers surprise 50 bps rate cut — 5 key takeaways from June MPC meeting
RBI Monetary Policy: Amid slowing growth and muted inflation, the Reserve Bank of India (RBI), in a surprise move, delivered a bigger-than-expected repo rate cut of 50 basis points on Friday, June 6. Marking a third straight reduction, the six-member monetary policy committee (MPC), led by Governor Sanjay Malhotra, lowered the policy rate to 5.50%. With today's cut, the RBI MPC has reduced rates by 100 basis points in 2025, to provide support to the economy amid global headwinds such as trade war worries. The RBI first delivered a quarter-point reduction in February, its first cut since May 2020. It made a similar-sized cut in April. Track all the LIVE RBI policy-related updates here Let's take a look at five key takeaways from RBI MPC's June meeting: Slowing down inflation allowed the RBI MPC to not only cut rates for a third consecutive time in June, but also deliver a larger-than-expected 50 bps reduction in the key repo rate. Consequently, the standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) shall stand adjusted to 5.25% and the marginal standing facility (MSF) rate and the Bank Rate to 5.75%. Governor Malhotra said that after reducing repo by 100 bps in quick succession, the monetary policy is left with limited space to support growth. Meanwhile, the MPC revised its stance to 'neutral' from 'accommodative'. RBI Governor added that from now MPC will carefully assess income data and the evolving outlook to chart out future policy. As RBI Governor Sanjay Malhotra signalled comfort on inflation and said core inflation is expected to remain benign, he lowered the CPI outlook for the financial year 2024-26 to 3.7% from 4% projected earlier. The RBI has made adjustments to its quarterly inflation forecasts. It raised the CPI projection for Q1 FY26 to 3.9% from 3.6%, while lowering the forecast for Q2 to 3.4% from 3.9%. For Q3 FY26, the inflation outlook was slightly increased to 3.9% from 3.8%, and for Q4, it was revised upward to 4.4% from 4.2%. The RBI, in its second policy meeting of FY26, maintained the real GDP growth at 6.5%. The RBI Governor maintained the growth forecasts for all its quarters as follows: Q1 FY26 at 6.5%, Q2 FY26 at 6.7%, Q3 FY26 at 6.6%, and Q4 FY26 at 6.3%. The Indian economy has been resilient in the face of geopolitical risks, with GDP growth surging to 7.4% in the January-March quarter. However, Malhotra said that growth remains lower than our aspirations amidst a challenging global environment and heightened uncertainty. The central bank, in another unexpected move, cut the cash reserve ratio (CRR) by 100 bps to 3% to accelerate policy transmission and boost lending. The CRR reduction would be done in four equal tranches starting from September to November, and would release ₹ 2.5 lakh crore in the banking system, RBI Governor Sanjay Malhotra said. 'Besides providing durable liquidity, it will reduce the cost of funding of the banks, thereby helping in monetary policy transmission to the credit market,' he added. CRR is the proportion of deposits that banks need to set aside as cash. The Governor also highlighted the easing of stress in unsecured loans and credit card portfolios, even as concerns in micro-finance segments persist. 'The stress witnessed earlier in retail segments like unsecured personal loans and credit card receivables portfolio has abated, while the stress in the micro-finance segment is persisting. Banks and NBFCs active in these segments are already recalibrating their business models, strengthening their credit underwriting practices and stepping up their collection efforts to avoid any excessive build-up of risks on this front in future,' Malhotra added.
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Business Standard
a day ago
- Business
- Business Standard
5 key takeaways from RBI MPC June meet: Rate cut, CRR, inflation and more
RBI MPC's latest decisions come amid easing inflationary pressures and continued challenges to economic growth. Here are the highlights from the central bank's June policy meet Vasudha Mukherjee New Delhi The Reserve Bank of India (RBI) Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, concluded its 55th meeting on June 6, announcing a major 50 basis point cut in the key policy repo rate to 5.5 per cent. The committee also shifted its policy stance from 'accommodative' to 'neutral' and revised its inflation outlook downwards for FY26. The latest decisions come amid easing inflationary pressures and continued challenges to economic growth. The majority of MPC members supported the 50 bps cut, while one member, Saugata Bhattacharya, backed a smaller 25 bps reduction. RBI monetary policy meeting june 2025 key takeaways 1: Repo rate cut by 50 bps The policy repo rate was reduced by 50 basis points to 5.5 per cent, with immediate effect. Consequently, the Standing Deposit Facility (SDF) rate now stands at 5.25 per cent, while both the Marginal Standing Facility (MSF) rate and the Bank Rate have been adjusted to 5.75 per cent. The MPC cited softening inflation and the need to support private consumption and investment as key reasons for front-loading the rate cut. While a rate cut had been expected after the RBI shifted its stance to accommodative in the April meeting, experts had anticipated a 25-basis point cut, as the RBI had done in the previous two meetings. 2: Change in policy stance to 'Neutral' Alongside the rate cut, the MPC changed its policy stance to neutral from accommodative. The committee said that with limited space left for further monetary easing, it will now adopt a data-dependent approach to ensure a balanced response to evolving inflation and growth dynamics. 3: Inflation forecast lowered The headline CPI inflation for FY26 is now projected at 3.7 per cent, revised down from the earlier forecast of 4 per cent made in April 2025. This outlook assumes a normal monsoon and is supported by moderating food inflation, contained core inflation, and softening global commodity prices. 4: GDP growth projection maintained at 6.5 per cent The RBI has maintained its real GDP growth forecast for FY26 at 6.5 per cent. This is based on sustained momentum in private consumption, investment, and services sector activity, despite global uncertainties. 5: Cash Reserve Ratio lowered to 3 per cent Following the MPC meet, the RBI announced a 100 basis point reduction in the Cash Reserve Ratio (CRR), lowering it to 3 per cent from 4 per cent. This reduction was aimed at enhancing liquidity in the banking system and improving the transmission of monetary policy. The reduction will be implemented in four equal tranches of 25 basis points each, commencing from September 6, 2025, and concluding on November 29, 2025. This phased approach is expected to inject approximately ₹2.5 trillion into the banking system by the end of November 2025. Growth stable, inflation eases The MPC noted that while growth remains 'lower than aspirations', inflation has significantly eased from above the upper tolerance band in late 2024 to well below the target by April 2025. The committee emphasised the need to support domestic growth through policy tools amid heightened global uncertainty. The next meeting is scheduled from August 4 to 6, 2025.
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Business Standard
a day ago
- Business
- Business Standard
HDFC Bank, Bajaj Fin: Rate sensitive shares up on repo rate, CRR cut by RBI
Rate sensitive stocks after RBI MPC meeting Shares of rate sensitive sectors, such as financials including banks, non banking financial companies (NBFCs), housing finance companies; automobiles; and real estate rallied up to 7 per cent on the bourses in Friday's intraday trade after the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) reduced the benchmark repo rate by 50 basis points (bps) to 5.50 per cent. The cut in the repo rate, which is the rate at which central banks lend to commercial banks, usually against government securities, was accompanies by a 100-bps reduction in cash reserve ratio (CRR). Besides, the Standing Deposit Facility (SDF) rate is now reduced to 5.25 per cent, while the Marginal Standing Facility (MSF) rate stands at 5.75 per cent. The RBI has shifted its policy stance from 'accommodative' to 'neutral'. The RBI MPC announced a reduction in the CRR by 1 percentage point to 3 per cent of net demand and time liabilities (NDTL) in a staggered manner during the course of the year. The CRR is the percentage of a bank's total deposits that it must keep as reserves in cash with the central bank, ensuring liquidity and controlling inflation. "This reduction will be carried out in four equal tranches of 25 bps each with effect from the fortnights beginning September 6, October 4, November 1 and November 29, 2025. The cut in CRR would release primary liquidity of about ₹2.5 trillion to the banking system by December 2025. Besides providing durable liquidity, it will reduce the cost of funding of the banks, thereby helping in monetary policy transmission to the credit market," RBI Governor Sanjay Malhotra said in a statement. At 10:37 AM, the Nifty Bank, Nifty Financial Services, Nifty PSU Bank, Nifty Private Bank index, Nifty Auto, and Nifty Realty index were up in the range of 1 per cent to 2 per cent. In comparison, the Nifty 50 was up 0.47 per cent at 24,867.20. Share prices of Godrej Properties, DLF, Ajmera Realty & Infra India, Kolte-Patil Developers, Suntech Realty and Signatureglobal (India), from the real estate sector, were up in the range of 3 per cent to 7 per cent. Further, shares of Mahindra & Mahindra Financial Services, Equitas Small Finance Bank, Ujjivan Small Finance Bank, Fino Payments Bank, Bajaj Finance, Shriram Finance, IDFC First Bank, RBL Bank and Axis Bank, from the financials, up between 2 per cent and 4 per cent. Ashok Leyland, Minda Corp, Maruti Suzuki India, Hero MotoCorp, TVS Motor Company, Uno Minda and Bajaj Auto from the automobiles and its related companies are up in the range of 1 per cent to 3 per cent. "The higher-than-expected 50bp rate cut decision by the MPC, though positive for growth is slightly negative from the market perspective for the near-term. This big rate cut is, as the RBI Governor remarked, front-loading of the rate cut. The change in monetary stance from accommodative to neutral also indicates that more rate cuts are unlikely unless the situation warrants. This big rate cut will impact the margins of the banks and, therefore, bank stocks will be under pressure in the near-term. However, the credit growth that this rate cut will hopefully stimulate will compensate for the dip in margins" said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments. InCred Equities view on Banks The brokerage firm believes that impending repo rate cuts will further deteriorate core profitability at State-Owned Enterprises (SOE) banks. Large private banks are better placed to manage margins in this repo rate downcycle vs. SOE banks, given a) relatively better starting point of margins, b) ability to drive the mix shift towards higher-yielding products, c) lagged repo rate transmission on linked loans, and d) the benefit of savings deposit rate cut of 25bp taken so far vs. limited savings account or SA rate cuts seen at SOE banks. Among large private banks, the brokerage firm has an ADD rating on Axis Bank, HDFC Bank and ICICI Bank. "We believe HDFC Bank can outperform ICICI Bank over the next few years with broadly similar earnings growth trajectory and healthy deposit growth delivery. Among SOE banks, analysts said they would prefer stocks with healthy on-balance sheet liquidity and levers to offset margin compression at reasonable valuations. The brokerage firm has an ADD rating on Punjab National Bank (PNB) & Canara Bank. State Bank of India (SBI) & Bank of Baroda (BoB) are quality franchises among SOE banks, but their valuations made us to assign a HOLD rating to them," InCred Equities said in a banking sector update. Kotak Institutional Equities' view on Real Estate sector Residential real estate closed FY2025 with 1 billion sq. ft. of sales, down 3 per cent year-on-year (Y-o-Y), largely impacted by Hyderabad, which saw a 33 per cent (Y-o-Y) decline. The MMR (Mumbai Metropolitan Region) and Bengaluru were soft on volumes on account of slower launches, while the NCR (National Capital Region) continued its strong showing, with 47 per cent Y-o-Y growth in volume sales. Price trends remained strong across markets, aiding 10 per cent Y-o-Y growth in sales value. 'Valuations for most residential real estate stocks stand at 7-10x adjusted EV/ Ebitda (FY2026E) post some recovery in the stock prices. H2FY25 saw an improvement in sales following a weaker H1FY25; developers expect the momentum to continue. They have guided for double-digit pre-sales growth (20 per cent Y-o-Y in FY2026E for our coverage), aided by industry growth and market share gains,' Kotak Institutional Equities said in a sector report. The combined launch pipeline at 140 million sq. ft (+30 per cent Y-o-Y) has a potential GDV of ₹1.7 trillion, which should also support the momentum. Net debt for the listed developers has come off significantly over the past few years, aided by healthy cash generation as well as equity raises. Strong balance sheets would allow the companies to invest in new land parcels, aiding future growth. The brokerage firm said they remain constructive and prefer DLF, Brigade and Prestige at the current price points.
