Posted at 10:52 AM , on April 10, 2019
The talk of town in the last few days was the Supreme Court order striking down the RBI circular issued on February 12th 2018. The circular had made it mandatory that any borrower above Rs.2,000 crore defaulting on the loan for more than 180 days would be automatically referred to NCLT. The Supreme Court has struck down this circular on the grounds that they were ultra vires the powers of the RBI. It is a case of very strong words used by the SC for a statutory regulator.
Posted at 10:47 AM , on April 10, 2019
The monetary policy had little by way of surprise when it announced a 25 basis point cut in rates. That was already factored in the market. In fact, the market was hoping for a bigger cut or a shift in stance to “accommodative”. That was not to happen as the RBI stuck to its neutral stance. If you look at the rate cut from a broader perspective, it just restores the status quo prior to June 2018. The RBI had earlier hiked rates by 50 bps in June and August. So, the cuts in February and April only restore the original status of rates.
Posted at 10:42 AM , on April 10, 2019
On April 01st, the Sensex completed a full 40 years of existence. Over the last 40 years, nothing has captured the sentiments of the market and the undertone of economic shifts better than the Sensex. Like most indices, the Sensex has been a powerful lead indicator of the Indian economy. The Sensex, which was launched in 1979 with a value of 100, is worth 39,000 today. That speaks a lot!
Posted at 11:27 AM , on April 1, 2019
Back in the December monetary policy announced by the RBI there was special mention of the banks shifting to an external benchmark for pricing loans. This was part of the policy statement and was expected to make a big difference to the way banks priced their loans. The new external benchmarking for loans was to become effective from April 01st but just a few days ahead the government has put off the plan. What exactly was this plan and why is it not taking off for now?
Posted at 11:25 AM , on April 1, 2019
In the last week of March, the RBI introduced the new concept of dollar swap auctions in the Indian money markets. The first issue of dollar swaps attracted buying interest of $16.3 billion against the offer size of $5 billion. That surely means that there could be more such issues in the future. But what are these dollar swaps and how do they really benefit the markets?