A senior trader with a primary dealership said: "It looks like he is saying don`t expect more than a 25 bps cut", adding that Das seemed more concerned about a lack of transmission of the RBI`s rate cuts so far. … [Read more...] about RBI’s change in stance as good as additional 25 bps rate cut: Shaktikanta Das
Central bank interest rates
finance ministry is not in favour of increasing goods and services tax rates on non-essential items in the next month's meeting of the GST Council, despite depressed revenue collections due to the nationwide lockdown to contain the spread of COVID-19. If goods and services tax (GST) rates are increased on non-essential items, sources said it will further bring down their demand and impede the overall economic recovery. Post the lockdown, the demand has to be induced and economic activity has to improve on all fronts, not just on essential items side, they said. However, the decision will be taken by the GST Council headed by the finance minister, according to sources. Rates will come up for discussion during the council meeting next month to be attended by state finance ministers, they added. The 39th meeting of GST Council was held in March, which proposed rationalisation of taxes on many items. The nationwide lockdown was announced by Prime Minister Narendra Modi on March 24 for 21 … [Read more...] about GST Council to meet next month; Finance ministry not for raising rates on non-essential items
Under the new regime, while the floating rate loan book will get re-priced, only the non-current and savings accounts (CASA) deposits deposits will see a re-pricing. CASA makes up asignificant portion of bank deposits. Interest rates on CASA deposits tend to be tend to be low but stable … [Read more...] about RBI external benchmark for bank loans credit negative: Moody’s
Bonds have much more money invested in them worldwide than in equities, but don’t get the column inches they deserve. That’s because bond returns don’t appear as spectacular as those in stocks, but in stressful times, they are good bets - more so if state backed. So, the latest Bharat Bond ETF issue will likely draw investors, who should earn 150 basis points more than the yields on existing tax-free debt. Set to be launched in July, the latest Bharat Bond ETF series aims to raise Rs 14,000 crore. This tranche of mutual fund units, tapping into retail savings, is estimated to yield a tax-free return of 6.21% for people in the marginal tax bracket. Those returns easily outpace the gains from existing tax-free bonds in the secondary market, perhaps by more than 150 basis points. So, these are cool bets for high net worth individuals shifting funds from risky assets. Tax Free Bonds (AAA) are now trading at 4.65% yield-to-maturity, a gauge used to measure returns on … [Read more...] about Should you invest in Bharat Bond ETF?
By Andy Mukherjee The spread of the coronavirus in India is showing no sign of abatement. Unless it catches a lucky break, Asia’s No. 1 pandemic hotspot is still a month or more away from a peak in infections (currently above 165,000) despite a severe lockdown. Tricky as the situation is for the country’s patchy healthcare infrastructure, the disease won’t be India’s only curve to flatten. The squiggly line that joins the cost of money at different maturities — the yield curve — deserves just as much attention. It’s unhealthy in an economy headed for a recession that 10-year funds cost nearly 5.75%, almost 275 basis points more than the three-month treasury bill yield. The central bank is slashing short-term rates and flooding banks with liquidity, and yet the long-term cost of capital is refusing to head lower. In large developing economies deeply challenged by the virus, from Brazil to Indonesia, the yield curve, or the excess of … [Read more...] about View: The pandemic isn’t India’s only curve to flatten