In line with market expectations, the Reserve Bank of India's Monetary Policy Committee (MPC) cut the key repo rate by 0.25 per cent to 6.25 per cent. This is the first rate cut in nearly 5 years and signals a shift in the central bank's policy to aid economic growth. Before this move, the RBI had kept the repo rate steady at 6.5 per cent for 11 straight meetings. RBI also raised India's GDP growth projection to 6.7 per cent from the previous estimate of 6.6 per cent.
<h2>RBI maintains a neutral policy stance</h2>
RBI's newly elected governor, Sanjay Malhotra, expressed optimism in the country's growth outlook, citing moderating inflation as a key factor. RBI also revised its inflation forecast for the next fiscal year to 4.2 per cent. According to Malhotra, rural consumption continues to improve, but urban consumption remains subdued. He emphasised that government policy support remains crucial for sustaining economic momentum. He also hailed the recent tax cuts announced in the budget as a major boost to household consumption.
<h2>Markets react with caution</h2>
Indian markets saw a muted response despite the rate cut. Investors also reacted to the moderate growth outlook for the next fiscal year. Analysts cite concerns over global economic uncertainty and domestic consumption trends as major factors that continue to weigh on sentiment.&nbsp;
Adhil Shetty, CEO of Bankbazaar.com reacted to the rate cut and said, 'The repo rate cut after 2 years is hugely welcome, and we congratulate Governor Malhotra on beginning his term with a bang. With the tax rate cuts earlier this month, the salaried and the middle class have received a double boost to tackle inflation and boost household savings.&nbsp;
He further explained, 'If you have a 20-year home loan at a rate of 8.75 per cent and had paid 12 EMIs by March, with a rate cut of 25 bps kicking in from April, your interest savings will improve by ₹8417 per lakh. For example, on a loan of ₹50 lakh, you&rsquo;ll save ₹4.20 lakh at this rate, with 10 EMIs being shaved off the loan tenure, all other parameters remaining constant.'
BankBazaar recommends that, 'borrowers with good credit scores seek more aggressive payment options like refinancing to a rate lower by 50 bps or more. If they keep the EMI constant with a lower rate &mdash; let&rsquo;s say 8.25 per cent &mdash; they will secure per-lakh savings of ₹14,480 over the remaining tenor. These savings of nearly 15 per cent per lakh are substantial. Assuming the rate kicks in from April 1 after 12 EMIs of this loan have been paid, we get per-lakh interest savings of ₹3002 from the rest of the year. On a loan of ₹50 lakh, this implies savings of ₹1.50 lakh for the second year of the loan. Now, if we see these savings in the backdrop of additional savings from income tax slab hikes, a salaried individual can have substantial gains for FY25-25. For instance, A salaried person with a gross income of ₹25 lakh and a home loan of ₹50 lakh (20 years, 9%, 12 EMIs paid by March 2025) can hope to save a total of ₹1.37 lakh in FY2025-26 or ₹11,461 per month. This will be through a combination of interest savings on the home loan rate reduction of 25 BPS and the tax savings from higher tax slabs from April 1.'

Business & Economy, Before this move, the RBI had kept the repo rate steady at 6.5 per cent for 11 straight meetings. RBI also raised India's GDP growth projection.

In line with market expectations, the Reserve Bank of India's Monetary Policy Committee (MPC) cut the key repo rate by 0.25 per cent to 6.25 per cent. This is the first rate cut in nearly 5 years and signals a shift in the central bank's policy to aid economic growth. Before this move, the RBI had kept the repo rate steady at 6.5 per cent for 11 straight meetings. RBI also raised India's GDP growth projection to 6.7 per cent from the previous estimate of 6.6 per cent. RBI maintains a neutral policy stance RBI's newly elected governor, Sanjay Malhotra, expressed optimism in the country's growth outlook, citing moderating inflation as a key factor. RBI also revised its inflation forecast for the next fiscal year to 4.2 per cent. According to Malhotra, rural consumption continues to improve, but urban consumption remains subdued. He emphasised that government policy support remains crucial for sustaining economic momentum. He also hailed the recent tax cuts announced in the budget as a major boost to household consumption. Markets react with caution Indian markets saw a muted response despite the rate cut. Investors also reacted to the moderate growth outlook for the next fiscal year. Analysts cite concerns over global economic uncertainty and domestic consumption trends as major factors that continue to weigh on sentiment. Adhil Shetty, CEO of Bankbazaar.com reacted to the rate cut and said, 'The repo rate cut after 2 years is hugely welcome, and we congratulate Governor Malhotra on beginning his term with a bang. With the tax rate cuts earlier this month, the salaried and the middle class have received a double boost to tackle inflation and boost household savings. He further explained, 'If you have a 20-year home loan at a rate of 8.75 per cent and had paid 12 EMIs by March, with a rate cut of 25 bps kicking in from April, your interest savings will improve by ₹8417 per lakh. For example, on a loan of ₹50 lakh, you’ll save ₹4.20 lakh at this rate, with 10 EMIs being shaved off the loan tenure, all other parameters remaining constant.' BankBazaar recommends that, 'borrowers with good credit scores seek more aggressive payment options like refinancing to a rate lower by 50 bps or more. If they keep the EMI constant with a lower rate — let’s say 8.25 per cent — they will secure per-lakh savings of ₹14,480 over the remaining tenor. These savings of nearly 15 per cent per lakh are substantial. Assuming the rate kicks in from April 1 after 12 EMIs of this loan have been paid, we get per-lakh interest savings of ₹3002 from the rest of the year. On a loan of ₹50 lakh, this implies savings of ₹1.50 lakh for the second year of the loan. Now, if we see these savings in the backdrop of additional savings from income tax slab hikes, a salaried individual can have substantial gains for FY25-25. For instance, A salaried person with a gross income of ₹25 lakh and a home loan of ₹50 lakh (20 years, 9%, 12 EMIs paid by March 2025) can hope to save a total of ₹1.37 lakh in FY2025-26 or ₹11,461 per month. This will be through a combination of interest savings on the home loan rate reduction of 25 BPS and the tax savings from higher tax slabs from April 1.'

RBI cuts repo rate to 6.25%, first cut in 5 years

Raghuram Rajan, the former Governor of the Reserved Bank of India (RBI), opened up about his engineering days in IIT-Delhi and shared his viewpoints on politics and protests.

Raghuram Rajan, the former Governor of the Reserved Bank of India (RBI), opened up about his engineering days in IIT-Delhi and shared his viewpoints on politics and protests. Rajan, who is in India to promote his book Breaking The Mould, once contested an election in the premier engineering college, he said in a recent interview with The Lallantop. "Election in IIT does not happen on a party basis. It happens on an individual basis," the economist said. "I became the Secretary of the English Debating Society. Then. I became General Secretary of the Students Affairs Council. We also protested against the institute authority because they were not giving scholarships to PhD students. So we shut the IIT for a day." However, he recalled the incident as "not my proudest moment." "The ability to protest has to be protected" Raghuram Rajan shared his opinion on political protests. He said, "Sometimes political protest is good because that changes the environment. The civil rights protest against racism in the US changed the society for the good. Political protests should be encouraged. However, non-violence is important." ALSO READ | Dawood Ibrahim, India’s most wanted criminal, poisoned in Pakistan: Report The economist continued by saying that not all protests are constructive. However, Rajan believes that one must have the freedom to protest. When asked about his views on protests and their impact on economic activity, Rajan was clear that "the ability to protest has to be protected." 'I have no interest in politics' Rajan recalled the time when he contested in the college elections and said, "I was involved in politics. Fortunately, I got out of it also." When asked whether he would join politics, the former RBI Governor said, "I have no interest in politics." ALSO READ | Delhi Metro: Woman dies after her saree gets stuck in closing doors, enquiry launched Rajan mentioned he wanted India to adopt the right policies so that the nation could become developed by 2047. In his new book, which he has co-authored with Rohit Lamba, an assistant professor at Pennsylvania University, he highlights the weaknesses and strengths of India. The book also talks about how there should be a debate on what policies India needs to adopt. On Saturday, Rajan said at another event that India will remain a lower-middle-income country if the potential growth rate stays at six per cent annually without any rise in population by 2047. (With inputs from agencies)

‘I have no interest in politics,’ says former Reserve Bank of India Governor Raghuram Rajan

India’s policymakers should focus on protecting the economy as businesses struggle amid the coronavirus pandemic instead of being overly focused on what ratings agencies think, former Reserve Bank of India governor Raghuram Rajan said on Thursday.

“It is also important to convince both domestic and international investors that after the crisis associated with the pandemic is over, we will return to fiscal responsibility over the medium term, and the government should do more to convince them of that,” Rajan told the Global Markets Forum.

<a href="https://www.wionews.com/india-news/with-spike-of-56282-cases-indias-covid-19-tally-reaches-1964537-318518">Also read|&nbsp;With spike of 56,282 cases, India's COVID-19 tally reaches 19,64,537</a>

India was placed under one of the strictest lockdowns in the world in late March for more than two months to stem the spread of the coronavirus, but cases have continued to rise steadily since the government eased restrictions in June, stymieing hopes of an economic recovery.

The government has announced several initiatives to help the poor and small, and medium-size businesses, but actual cash outgo from the government’s measures has been estimated at just about 1% of GDP.

Several attribute the fiscal prudence to fear of a downgrade after Moody’s cut India’s rating and outlook in early June followed closely by a change in outlook from Fitch.

<a href="https://www.wionews.com/india-news/india-china-standoff-indian-security-officials-seek-four-to-six-dedicated-satellites-along-lac-to-keep-an-eye-on-china-report-318634">Also read|&nbsp;India-China standoff: Indian security officials seek four to six dedicated satellites along LAC to keep an eye on China: Report</a>

The central bank on its part too has reduced the key lending rate by 115 basis points on top of the 135 bps last year but decided to hold rates steady earlier in the day against market expectations as inflation pressures have risen.

“The RBI and government have certainly been cooperating, but it seems like it is elsewhere, the ball is in the government’s court to do more,” Rajan said.

He said the RBI needs to focus on whether credit is reaching the stressed areas of the economy and also if the viable firms were able to access credit and not the unviable ones.

“And I think that’s where it has to focus its attentions, because resources, as you well know, are limited in India today.”

To ease debt strains on companies and lenders, the RBI on Thursday said it would allow restructuring of corporate loans by banks, a move that was widely awaited by the industry.

Governor Shaktikanta Das said there was room to cut rates further but the central bank will ensure inflation stays within its target range. Most analysts expect it to reduce rates once inflation is brought under control.

Government officials too have suggested the possibility of any more fiscal stimulus being announced, would only come in the second half of the fiscal year, once a recovery has taken root and coronavirus cases have peaked.

“What India should focus on at this point is protecting its economic capabilities, so that when it has dealt with the virus it can go resume activity in a reasonable way. That should be the focus,” Rajan said.

“And if it does that, there is no reason why the rating agencies will not see that as an appropriate policy”.

India’s policymakers should focus on protecting the economy as businesses struggle amid the coronavirus pandemic instead of being overly focused on what ratings agencies think, former Reserve Bank of India governor Raghuram Rajan said on Thursday.

India’s policymakers should focus on protecting the economy as businesses struggle amid the coronavirus pandemic instead of being overly focused on what ratings agencies think, former Reserve Bank of India governor Raghuram Rajan said on Thursday. “It is also important to convince both domestic and international investors that after the crisis associated with the pandemic is over, we will return to fiscal responsibility over the medium term, and the government should do more to convince them of that,” Rajan told the Global Markets Forum. Also read| With spike of 56,282 cases, India's COVID-19 tally reaches 19,64,537 India was placed under one of the strictest lockdowns in the world in late March for more than two months to stem the spread of the coronavirus, but cases have continued to rise steadily since the government eased restrictions in June, stymieing hopes of an economic recovery. The government has announced several initiatives to help the poor and small, and medium-size businesses, but actual cash outgo from the government’s measures has been estimated at just about 1% of GDP. Several attribute the fiscal prudence to fear of a downgrade after Moody’s cut India’s rating and outlook in early June followed closely by a change in outlook from Fitch. Also read| India-China standoff: Indian security officials seek four to six dedicated satellites along LAC to keep an eye on China: Report The central bank on its part too has reduced the key lending rate by 115 basis points on top of the 135 bps last year but decided to hold rates steady earlier in the day against market expectations as inflation pressures have risen. “The RBI and government have certainly been cooperating, but it seems like it is elsewhere, the ball is in the government’s court to do more,” Rajan said. He said the RBI needs to focus on whether credit is reaching the stressed areas of the economy and also if the viable firms were able to access credit and not the unviable ones. “And I think that’s where it has to focus its attentions, because resources, as you well know, are limited in India today.” To ease debt strains on companies and lenders, the RBI on Thursday said it would allow restructuring of corporate loans by banks, a move that was widely awaited by the industry. Governor Shaktikanta Das said there was room to cut rates further but the central bank will ensure inflation stays within its target range. Most analysts expect it to reduce rates once inflation is brought under control. Government officials too have suggested the possibility of any more fiscal stimulus being announced, would only come in the second half of the fiscal year, once a recovery has taken root and coronavirus cases have peaked. “What India should focus on at this point is protecting its economic capabilities, so that when it has dealt with the virus it can go resume activity in a reasonable way. That should be the focus,” Rajan said. “And if it does that, there is no reason why the rating agencies will not see that as an appropriate policy”.

India should focus on protecting economy, says ex-RBI governor

Shares marked a one-week closing high on Wednesday, driven by financials and automakers after the government appointed a new central bank governor quickly, amid state election results raising hopes of increased rural spending.

The government moved swiftly to appoint ex-finance ministry official Shaktikanta Das as Reserve Bank of India governor on Tuesday, just a day after Urjit Patel resigned from the post, following months of clashes with the government over lending curbs and how to deploy the central bank's surplus reserves.

Both the broader NSE index and the benchmark BSE Sensex ended 1.79 per cent firmer. The NSE Nifty settled at 10,737.6, while the Sensex clocked out at 35,779.07.

Shares of Housing Development Finance Corporation Ltd rose 1.8 per cent, while those of Hero MotoCorp Ltd climbed 7.2 per cent to its best close in three months. The Nifty Auto Index ended 3.6 per cent higher.

Bharti Airtel Ltd's stock surged as much as 7.2 per cent in the last few minutes of trade, before settling 5.3 per cent higher.

Shares marked a one-week closing high on Wednesday, driven by financials and automakers after the government appointed a new central bank governor quickly, amid state election results raising hopes of increased rural spending.

Shares marked a one-week closing high on Wednesday, driven by financials and automakers after the government appointed a new central bank governor quickly, amid state election results raising hopes of increased rural spending. The government moved swiftly to appoint ex-finance ministry official Shaktikanta Das as Reserve Bank of India governor on Tuesday, just a day after Urjit Patel resigned from the post, following months of clashes with the government over lending curbs and how to deploy the central bank's surplus reserves. Both the broader NSE index and the benchmark BSE Sensex ended 1.79 per cent firmer. The NSE Nifty settled at 10,737.6, while the Sensex clocked out at 35,779.07. Shares of Housing Development Finance Corporation Ltd rose 1.8 per cent, while those of Hero MotoCorp Ltd climbed 7.2 per cent to its best close in three months. The Nifty Auto Index ended 3.6 per cent higher. Bharti Airtel Ltd's stock surged as much as 7.2 per cent in the last few minutes of trade, before settling 5.3 per cent higher.

Nifty, Sensex end higher after swift change of guard at RBI

The Reserve Bank of India (RB) left key policy rates unchanged, mostly on the back of rising inflation, which has been above the 5 per cent level in May and June, with eyes on the impact of the 7th Pay Commission payout and the monsoon. 
 
While the move was largely in line with the expectations put forth by experts, bankers and the markets, this was also RBI Governor Raghuram Rajan&#39;s last monetary policy review. Rajan will be stepping down from the RBI chair on September 4 when his term comes to an end. 
 
In the customary post-policy interaction with the media, Rajan, while answering the questions posed to him, left messages for the public, his critics and supporters, and talked about the RBI job and his future plans. 
 
On RBI job 
 
&quot;This has been a fantastic job. I have enjoyed every minute of it because everyday my RBI colleagues and I sit and work, we manage to move the needle a little bit everyday...there are very few places you can do this. So it has been fantastic. I hope there&#39;s some value add,&quot; he asserted.&nbsp; 
 
 
Advise to successor 
 
&quot;I don&#39;t advise my successors,&quot; Rajan said. 
 
Answering a question whether his successor will be pressurised to cut rates and sharply soon, the out-going Governor said, &quot;the next decision will be made by the monetary policy committee. There will be six people deciding the interest rates path. So it will be an independent decision.&quot; 
 
To his critics and supporters 
 
&quot;I have nothing to say to my critics. At the end of the day (what matters is) do you feel like you have made a useful contribution, are some people are better because of it? There are times I get notes in a plane saying thank you for what you&#39;re doing,&quot; he said. 
 
&quot;The snap judgements by critics or supporters don&#39;t matter. What matters is what plays out the long run -- sustainable growth of the country, job creation, movement to middle income economy,&quot; Rajan added. 
 
Rajan&#39;s message to the public 
 
The RBI will be rolling out a &#39;public awareness and consumer protection campaign&#39; very soon. Highlighting the campaign, Rajan said that there are two main pain points for bank customers and banks
<ul>
	<li>Meeting Know Your Customer (KYC) rules:&nbsp;Rajan said, while the KYC rules have been largely simplified, there may be instances that the local bank branch may not be aware of the changes made by the RBI. To simplify this, the RBI has added a FAQ (Frequently Asked Questions) tab on its website on the morning of August 9, to intimate the customer and the bank branches of the changes made to KYC norms.This includes all the guidelines currently in place to fulfil the KYC norms needed to open and maintain a bank account. A complete list of 24 questions with further links, have been provided by the central bank.</li>
</ul>
While speaking at the conference, Rajan said, according to the revised KYC norms, it&#39;s not necessary to physically go to the bank to get your address changed if you move houses. Your new address can be self certified but the bank branch may not be aware. You can show them the KYC guidelines of RBI&#39;s website, he said.

<ul>
	<li>Rajan&#39;s second warning on fraudulent e-mails in his name:&nbsp;The outgoing RBI chief warned the public about responding or paying service fees to e-mails (or senders) that are sent in his name or any future RBI Governor&#39;s name, promising a huge sum of money, in exchange of a small fee. &quot;Delete the email,&quot; he said, &quot;the e-mails are not from me, and RBI doesn&#39;t give out money to ordinary citizens even though we print plenty of it.&quot;</li>
</ul>
 
On NPA 
 
&quot;I&#39;m comfortable with the recognition process (towards NPA). The banks have taken a lot of steps (to address NPAs), some of them have taken more than required steps. The culture of clean up is embedded and so is the culture of recovery,&quot; he was quoted as saying.&nbsp; 
 
In the future, even after he steps down, Rajan said he was confident there will be no backtracking on NPA. &quot;There has been cooperation all along the way between the government and the RBI. The banks know what needs to be done,&quot; he said. 
 
On impact of GST and 7th Pay Commission 
 
&quot;It is not wise to assume that Goods and Services Tax (GST) implementation will increase inflation. What&#39;s important, is to see whether the impact of the GST implementation will be long term or short term.&quot;&nbsp; 
 
In terms of the 7th pay commission payout, the housing allowance maybe into prices over time but it may be a one time thing, he summed up.&nbsp; 
 
It&#39;s pertinent to mention that salaries for central government employees and pensioners for the years 2016 to 2026 is based on the recommendations of 7th pay commission that comprised a four-member panel and took 21 months to prepare the report.&nbsp; 
 
(This report first appeared in DNA) 
 
 
&nbsp;

Raghuram Rajan, who steps down on September 4, also left messages for critics and supporters and talked about the RBI job after the meet

The Reserve Bank of India (RB) left key policy rates unchanged, mostly on the back of rising inflation, which has been above the 5 per cent level in May and June, with eyes on the impact of the 7th Pay Commission payout and the monsoon. While the move was largely in line with the expectations put forth by experts, bankers and the markets, this was also RBI Governor Raghuram Rajan's last monetary policy review. Rajan will be stepping down from the RBI chair on September 4 when his term comes to an end. In the customary post-policy interaction with the media, Rajan, while answering the questions posed to him, left messages for the public, his critics and supporters, and talked about the RBI job and his future plans. On RBI job "This has been a fantastic job. I have enjoyed every minute of it because everyday my RBI colleagues and I sit and work, we manage to move the needle a little bit everyday...there are very few places you can do this. So it has been fantastic. I hope there's some value add," he asserted. Advise to successor "I don't advise my successors," Rajan said. Answering a question whether his successor will be pressurised to cut rates and sharply soon, the out-going Governor said, "the next decision will be made by the monetary policy committee. There will be six people deciding the interest rates path. So it will be an independent decision." To his critics and supporters "I have nothing to say to my critics. At the end of the day (what matters is) do you feel like you have made a useful contribution, are some people are better because of it? There are times I get notes in a plane saying thank you for what you're doing," he said. "The snap judgements by critics or supporters don't matter. What matters is what plays out the long run -- sustainable growth of the country, job creation, movement to middle income economy," Rajan added. Rajan's message to the public The RBI will be rolling out a 'public awareness and consumer protection campaign' very soon. Highlighting the campaign, Rajan said that there are two main pain points for bank customers and banks Meeting Know Your Customer (KYC) rules: Rajan said, while the KYC rules have been largely simplified, there may be instances that the local bank branch may not be aware of the changes made by the RBI. To simplify this, the RBI has added a FAQ (Frequently Asked Questions) tab on its website on the morning of August 9, to intimate the customer and the bank branches of the changes made to KYC norms.This includes all the guidelines currently in place to fulfil the KYC norms needed to open and maintain a bank account. A complete list of 24 questions with further links, have been provided by the central bank. While speaking at the conference, Rajan said, according to the revised KYC norms, it's not necessary to physically go to the bank to get your address changed if you move houses. Your new address can be self certified but the bank branch may not be aware. You can show them the KYC guidelines of RBI's website, he said. Rajan's second warning on fraudulent e-mails in his name: The outgoing RBI chief warned the public about responding or paying service fees to e-mails (or senders) that are sent in his name or any future RBI Governor's name, promising a huge sum of money, in exchange of a small fee. "Delete the email," he said, "the e-mails are not from me, and RBI doesn't give out money to ordinary citizens even though we print plenty of it." On NPA "I'm comfortable with the recognition process (towards NPA). The banks have taken a lot of steps (to address NPAs), some of them have taken more than required steps. The culture of clean up is embedded and so is the culture of recovery," he was quoted as saying. In the future, even after he steps down, Rajan said he was confident there will be no backtracking on NPA. "There has been cooperation all along the way between the government and the RBI. The banks know what needs to be done," he said. On impact of GST and 7th Pay Commission "It is not wise to assume that Goods and Services Tax (GST) implementation will increase inflation. What's important, is to see whether the impact of the GST implementation will be long term or short term." In terms of the 7th pay commission payout, the housing allowance maybe into prices over time but it may be a one time thing, he summed up. It's pertinent to mention that salaries for central government employees and pensioners for the years 2016 to 2026 is based on the recommendations of 7th pay commission that comprised a four-member panel and took 21 months to prepare the report. (This report first appeared in DNA)

Outgoing RBI chief keeps policy rate unchanged at last review meet; talks about GST, 7th pay commission