Tag: RBI

Business

Challenges and opportunities faced by people in lending money to small businesses

Jun 19, 2024 by Sujata Muguda 0 Comments #ITR, #KYC, #RBI, #Sachin Financial Services Private Limited, #Sachin Vashishth, #Small Businesses

According to Sachin Vashishth, Founder of Loan Expert, Sachin Financial Services Private Limited
Small businesses play a crucial role in the economy by bringing new ideas, jobs, and energy to communities. Despite their importance, many small business owners face big hurdles when they need loans. These obstacles can hold back their growth and ability to keep going, so it’s important to know what’s causing them. One major issue is that banks and other lenders have very strict rules for giving out loans. These rules can be tough for small businesses to meet, making it hard for them to get the financial help they need. To qualify for loans, small businesses usually need a strong credit record, valuable assets to secure the loan, and a history of making profits. Meeting these conditions can be very challenging for small businesses, especially new ones. Startups often don’t have a long credit history, which makes them seem riskier to lenders. Also, the need for collateral can be a big problem because many small business owners don’t have enough valuable assets to offer as security for a loan.

Sachin Vashishth

Furthermore, not having a strong credit history can greatly restrict a small business’s chances of getting financial support. New businesses or those that mainly deal in cash transactions might not have a credit score that meets lenders’ requirements. This absence of credit history sets up a tough cycle: without a loan, it’s hard for a business to expand and establish a credit record, but without a credit record, getting a loan becomes almost unattainable. In the Covid19 scenario, RBI/ Govt itself gave remedy to all borrowers, But the opposite to if there is any loan bouncing or default in payment of a loan of that particular time bank takes it offensive and doesn’t give relief to new applications while sanctioning of loan. This issue is especially common among businesses owned by minorities, who have historically faced barriers in building credit. Another major obstacle is the complicated and sometimes unclear process of applying for a loan. The amount of paperwork and documents needed can be a lot for small business owners who are already busy running their businesses every day. They often have to provide detailed business plans, financial forecasts, tax records, and personal financial statements, which can be quite challenging to put together. Moreover, the lengthy process of applying for a loan can discourage entrepreneurs who are juggling many responsibilities from seeking traditional funding sources.

Another factor that discourages small business owners is the expensive nature of borrowing. Even if loans are an option, they frequently carry steep interest rates and fees, making them less appealing or even difficult to handle for small business owners. Although all documentation like KYC, ITR, and banking transactions are good as per banking standards sometimes bank officials refuse to give loans to some needy person stating negative profile of their business, location, cast, political and legal references. This is particularly the case for those who are unable to meet the requirements for loans from mainstream banks and have to seek assistance from alternative lenders. These alternative financial institutions, although easier to approach, typically impose higher rates to compensate for the perceived greater risk of lending to small businesses. Bank requires a 3-year ITR with a balance sheet that is not available to small business owners. Bank requires a current account and all credit transactions in that…that is not possible with small businessman because of their cash dealings. Moreover, economic unpredictability and market circumstances have a substantial impact. In times of economic decline or instability, lenders tend to be more cautious, making their lending requirements stricter and decreasing the credit accessible to small businesses. The recent COVID-19 pandemic clearly illustrates how external factors can significantly affect the availability of financing, with many small businesses facing challenges in obtaining the necessary capital to endure lockdowns and decreased consumer expenditure.

Although small businesses encounter various difficulties in obtaining loans, recognizing these barriers is the initial move toward establishing a more encouraging financial environment. By tackling the stringent lending requirements, absence of credit history, intricate application procedures, expensive borrowing expenses, economic instabilities, and regulatory challenges, stakeholders can contribute to guaranteeing that small businesses have the financial support required to prosper.

News

RBI Holds Repo Rate at 6.50 Percent

Jun 7, 2024 by Mansi Praharaj 0 Comments #EMIs, #Mr. Abheek Barua, #Mr. Dilip Modi, #RBI, #Spice Money Mr. Umesh Revankar

On June 7, 2024, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) chose to uphold the repo rate at 6.50%. This decision represents the eighth consecutive instance of the repo rate remaining unchanged, demonstrating the RBI’s commitment to maintaining economic stability amidst global uncertainties and domestic inflation concerns.

 For homeowners and potential buyers, this development means there will be no immediate impact on real estate or home loan Equated Monthly Installments (EMIs). With the repo rate staying constant, banks are unlikely to adjust their lending rates in the near future, thus ensuring stability in EMIs for now.

 The repo rate, which is set by the RBI, significantly influences home loan interest rates in India. Changes in interest rates affect real estate demand; lower rates typically stimulate demand by making borrowing more affordable, potentially leading to an increase in property prices. By choosing to keep the rate unchanged, the RBI aims to sustain economic stability, making housing more affordable and bolstering consumer confidence.

 The real estate sector remains optimistic about the possibility of lower interest rates later in the year, which could drive housing demand and contribute to growth across related industries.

 Mr. Abheek Barua, Chief Economist and Executive Vice President, HDFC Bank

 As expected, the RBI kept its policy rate and stance unchanged. Although, the MPC decision saw two dissents instead of the one seen in the previous policy. The one positive out of the policy was the upward revision in the GDP growth forecast to 7.2% from 7% earlier for FY25. On the other hand, inflation forecasts were kept unchanged.

 The RBI remains in a wait and watch mode to assess domestic developments like the monsoon performance, food inflation, and the new fiscal strategy before moving on rates. We continue to see the possibility of a rate cut in Q4 2024.
Despite the governors’ emphasis that monetary policy decisions are driven primarily by domestic considerations, we think that any rate cut action could end up being aligned with the timing of the Fed’s rate cut cycle to limit financial market volatility.

 On the regulatory front, the increase in bulk deposit limit to INR 3 crore from INR 2 crore, signals the RBI’s intention to encourage banks to garner greater retail deposits to fund credit growth.

 Mr. Dilip Modi, Founder & CEO of Spice Money

 “The Reserve Bank’s decision to establish a Digital Payments Intelligence Platform marks a significant advancement for the digital payment ecosystem. As India swiftly ascends to become a digital payment leader, fueled by the extensive adoption of solutions like UPI and AePS, there has been a concurrent rise in fraudulent activities. The RBI’s annual report indicates that digital payment fraud surged more than fivefold, reaching a record ₹1,457 crore in the fiscal year ending March 2024. This initiative aims to address these challenges by underscoring the necessity for a comprehensive, system-wide approach to ensure safety and security in digital transactions.

 AePS has been witnessing a surge in fraudulent activities which has affected the trust among rural users. Vulnerabilities have been exploited by scammers resulting in significant financial losses thereby undermining user confidence. Online fraud through the Aadhaar Enabled Payment System (AePS), accounted for 11 percent of online financial scams during 2023, according to an analysis from India’s cybercrime unit. While the central bank has already announced its aim to bring a standardized secure onboarding process for all, this initiative can help in curbing the fraudulent activities even further. Strengthening the trust among rural citizens in AePS is vital for the continued growth of the payment ecosystem in rural India.

 We at Spice Money have been working tirelessly to ensure the safety and security of our customers. Addressing concerns surrounding AePS has been a top priority for us. We welcome this move by the RBI, which will help in tackling these issues, contributing to creating a robust system. We hope that the benefits of this platform will also extend to AePS, which is a crucial driver of financial inclusion and the UPI for Rural India. The proposed platform’s real-time data sharing and network-level intelligence will significantly help in creating a more secure and reliable digital payments environment thereby boosting confidence of the citizens of India.”

 Mr. Umesh Revankar, Executive Vice Chairman, Shriram Finance –
“With headline inflation moderating, liquidity remaining stable and growth figures being impressive, many observers felt that maybe this time, the MPC may want to consider adopting a dovish stand. However, with the geo-political situation still remaining volatile and India’s food inflation staying elevated, the RBI has rightly prioritised caution by maintaining status quo on policy rates.
The RBI’s revised projection of a Real GDP growth rate of 7.2% for FY25 compared to 7% earlier is a sign of confidence in the Indian economy’s resilience. The proposal to establish a Digital Payments Intelligence Platform promises to fortify the digital payments ecosystem. The ecosystem will be further boosted by the inclusion of various recurring payments under the e-mandate framework.”
News

Comment on RBI’s framework for Fintech SRO

May 31, 2024 by Sujata Muguda 0 Comments #AdvaRisk, #Ashish Goyal, #Fibe, #Fintech SRO, #India’s first and only end-to-end RiskTech, #One of India’s leading consumer lending apps, #RBI, #RBI's framework, #SRO, #SRO-FT's, #Vishal Sharma

Vishal Sharma, Cofounder & CEO, AdvaRisk (India’s first and only end-to-end RiskTech for collateral based lending) – “The oversight and enforcement clause, which includes counselling, cautioning, reprimanding, and expelling members, will help maintain integrity in the fintech ecosystem and enhance the SRO-FT’s effectiveness. This approach ensures uniformity without stifling innovation and growth, protects consumers, and enhances the fintech sector’s credibility. Additionally, it fosters trust within the banking fraternity, encouraging collaboration with SRO-listed companies. The temporary or permanent removal of non-compliant entities ensures that only committed and trustworthy members remain, further strengthening the ecosystem.”

Ashish Goyal, Cofounder & CFO, Fibe (one of India’s leading consumer lending apps) – “This positive initiative by RBI is pivotal to fostering a balanced, innovative, and responsible fintech ecosystem. Being industry-led and built on a ‘representative’ structure will allow the self-regulatory organisation (SRO) to understand the nuances of the ecosystem much better and help in leveraging the collective expertise and experience of the members. This will lead to better and more feasible solutions for the industry players. It will also result in the development of standards that are practical, adaptive, and widely accepted within the fintech community. Overall SRO will enhance communication between the regulator and the industry manifold thereby ensuring continuous and responsible innovation that is a win-win for both the industry and customers.”

Business

Decentro Launches fully RBI-Compliant Next-Gen Payment Aggregator stack for India

May 23, 2024 by Sujata Muguda 0 Comments #Bangalore, #BFSI, #Decentro, #India’s leading fintech infrastructure platform, #innovation, #Muthoot Capital, #Pratik Daudkhane, #RBI, #RBI-Compliant Next-Gen Payment, #Rohit Taneja

Bangalore, 23May 2024: Decentro, India’s leading fintech infrastructure platform, proudly announces the launch of its next-generation Payment Stack (Flow 2.0). The stack is designed to seamlessly address businesses’ expansive payment needs, delivering high performance, unwavering compliance, and utmost security. It marks a significant move to continue transforming digital payment solutions with enhanced efficiency and reliability while simplifying businesses’ integration and operation of their day-to-day payment collections.

Decentro Logo

According to industry reports, the Indian payment market is estimated at USD 357.51 billion in 2024. It is expected to reach USD 814.42 billion by 2029, growing at a CAGR of 17.90% during the forecast period (2024- 2029). However, today, merchants and financial institutions find it a growing challenge to simplify the integration process and comply with regulations .

“This milestone couldn’t come at a more opportune moment as we complete our 4 years of operations as one of India’s leading fintech infrastructure providers. Since inception, our goal has been to streamline the most intricate financial processes for businesses across the spectrum, and the introduction of the Flow 2.0 stack underscores this commitment. Witnessing a remarkable 300% growth in our customers’ transactions in just the past 12 months stands as a testament to our product quality and differentiation in solutions.” – Rohit Taneja, Co-founder and CEO of Decentro.

“We are focused on providing businesses with a robust, secure, and fully compliant solution that addresses their diverse payment requirements and significantly elevates operational efficiency. To put things in perspective, we see a ~30% reduction in operational costs and a 3X reduction in time to market amongst our merchants by switching to our digital payments stack, recurring payments via e-NACH & UPI Autopay, as well as our automated reconciliation system” – Pratik Daudkhane, Cofounder.

Flow 2.0 will help enterprises sharpen their focus on critical features, including exceptional performance through fast and reliable transaction processing and complete RBI compliance to ensure operations within frameworks. This stack also provides enhanced security with top-tier measures to protect sensitive data and unmatched stability built on a solid infrastructure that minimizes downtime for continuous, uninterrupted business operations.

Flow currently empowers payments for customers like Shiprocket, Kodo, Volopay, etc., with unique advantages such as industry-best success rates and lowest downtimes, ensuring minimal disruptions and maximised business efficiency. It supports faster go-to-market strategies with rapid deployment capabilities, enabling 10X improvement overall in Capex and Opex combined.

With this development, Decentro aims to empower categories such as BFSI, Logistics, Online Marketplaces, and fintech/SaaS platforms. In under four years, the Decentro group has rapidly built a full-stack fintech infrastructure platform that provides solutions to more than 800 companies, including Freo (MoneyTap), CashE, Muthoot Capital, Credit Fair, Shiprocket, Protium Finance, and many more. With critical pillars of customer experience, innovation, and compliance, Decentro currently has 40+ deep APIs, SDKs & automated workflows catering to the entire value chain of a company’s financial infrastructure needs across payments, identity, and credit.

Business

MPC Quote | Dr. Poonam Tandon | Chief Investment Officer | IndiaFirst Life Insurance

Feb 8, 2024 by Sujata Muguda 0 Comments #Dr. Poonam Tandon, #IndiaFirst Life Insurance, #MPC Quote, #RBI

Dhruv Agarwala,Group CEO, REA India

“The RBI’s decision to maintain the status quo on the repo rate was widely expected. As the central bank carefully balances between fostering growth and containing inflation, the stability in home loan interest rates offers a welcome respite to borrowers, with no immediate increase in monthly EMIs. Looking ahead, with optimistic projections for improved growth and subdued inflation, we foresee a potential downward adjustment in the repo rate by mid-2024. This outlook is reinforced by continued governmental support and a favourable monetary policy environment, setting the stage for optimism within the sector. Additionally, factors like rapid urbanisation, increasing disposable incomes, and a surge in new home launches expected in the final quarter of the fiscal year contribute to this positive sentiment.within the sector. Additionally, factors like rapid urbanization, increasing disposable incomes, and a surge in new home launches expected in the final quarter of the fiscal year contribute to this positive sentiment.

News

Paytm Payouts now enables businesses with 24*7 RTGS Money Transfer

Dec 15, 2020 by Rekha Nair 0 Comments #Paytm, #Paytm Payouts 24*7 RTGS facility, #RBI

Mumbai: India’s homegrown digital financial services platform Paytm announced that its Payout service which enables businesses to make bulk and instant money transfers to their employees, vendors & partners has launched a 24*7 RTGS facility to support companies make high-value transactions seamlessly. The company said that the launch comes after the Reserve Bank of India (RBI) made an announcement to make RTGS 24*7. Paytm Payouts’ APIs and Paytm for Business Dashboard to make bulk payments to Bank Accounts, UPI addresses, and Paytm Wallets instantly. The service is especially beneficial for SMEs & large enterprises who use it to adopt an automated payment mechanism that saves their time and resources.

RBI’s move further supports commerce in the country and enhance ease of doing business recently allowed the transfer of funds through Real-Time Gross Settlement (RTGS) round-the-clock, 365 days a year. With the launch of this facility, Paytm Payout is the only service provider that offers seamless round the clock money transfers via Wallet, UPI, IMPS, NEFT & RTGS.

The company said that with 24*7 RTGS facility companies are now empowered to manage cash flows more efficiently. RTGS has a minimum transfer limit of Rs 2 lakh, with no upper limit, which helps businesses or individuals for making high-value transactions. Paytm Payout’s RTGS facility enables businesses to reduce their working capital requirement as they can now transfer salaries to employees even on the last day of the month even if it is a holiday or a Sunday. The company also said that its RTGS service also helps businesses in servicing their clients better as companies can now fulfil payment requests post-market hours.

Paytm Spokesperson said, “With Paytm Payouts 24*7 RTGS facility, companies are now empowered to handle their finances much better as high-value transactions can be made anytime. This in turn would help reduce their working capital requirement. Our facility will further enhance the ease of making digital payments and empower businesses to quickly make and receive critical payments seamlessly. We believe this will help in further boosting the adoption of online payments in the country, making more businesses digitally empowered.”

The Payouts service is driven by a powerful API that can be integrated with any platform, thereby eliminating the need for corporates to invest time & resources to build their own platform. It allows bulk payments to be made to Bank Accounts, UPI addresses, Paytm Wallets, Gift Vouchers and other employee benefits like Food Allowance instantly. In addition, companies and their finance department can manage their receivables and payables including utility payments, rent payments, vendor invoices, employee reimbursements, collections using this product. Also, it offers the highest transaction success rate in the industry. Apart from thousands of small businesses, a growing list of major companies like Pidilite Industries, Schneider Electric and Havmor Icecreams use the service.

Business World

RBI maintains status quo, realtors rely on increased demand

Dec 5, 2020 by Neel Achary 0 Comments #RBI, #real estate, #Repo Rate

The RBI maintained status quo as the MPC voted unanimously to hold rates steady. The repo rates have kept unchanged at 4%, and the RBI expects positive growth in Q3 and Q4. The real estate sector was expecting some additional announcements; however, the sector has to rely on the announcements made in the last few months only. Real estate experts feel that the demand is high, and the latest status quo of the RBI will not have any negative impact on it.
The announcements of repo rate cuts by the apex bank during the lockdown have helped the reeling sector of real estate. Apart from the rate cuts, RBI has also gone ahead with measures such as rationalization of risk-weightage norms, restructuring of loans based on the projects, linking home loans to LTV, the intensity of policy changes made within a span of few months reflect the positive intent of authorities to support major sectors like real estate. “The onus to lend continuous support lies entirely on banks’ quick disbursal of funds. Home loan interest rates are at their lowest, which has already shown a positive impact during the festive months in the residential segment. The upcoming quarter is likely to witness more of it and register a positive curve,” says Yash Miglani, MD Migsun Group.

Maintaining that the RBI’s recent decision to maintain the status quo was expected due to the pace observed in the market around festive times, Vijay Verma, CEO, Sunworld Group, says, “Apex bank has also gone beyond the usual changes and introduced notable policy changes over the past few months, aiding both buyers and developers. This has brought a certain extent of vibrancy in the market, post the stillness in the market that lasted almost a quarter. The flexibility to cut rates if the economy needs support indicates a positive signal for the future. Residential real estate backed with festive offers and deferment payment plans has been fairing well post-unlock. We are hoping with GDP growth for 2021 projected at -7.5% the realty sector can contribute a significant share in the overall economic development.”

The sector is already optimistic, and the sales figures over the last few months are an indication that buyers are enjoying the low home loan interest rates. “Real estate sales have improved, especially after home loan interest, and it will further improve if other states reduce stamp duty after the announcements made by Maharashtra, Karnataka, and Madhya Pradesh. The sector will benefit a lot as the demand is already high and reduction in stamp duty will provide a further boost,” says Ashok Gupta, CMD, Ajnara Group.

Talking about the commercial segment, Sagar Saxena, Project Head, Spectrum Metro, says, “We are happy that the RBI is optimistic about the GDP growth. The foremost beneficiary of such a positive outlook in real estate would be the retail segment as it depends on consumer spending and business expansions. The demand for office spaces and commercial places is already witnessing a significant jump, and people are coming out to spend in malls.”

Adds Ashish Bhutani, MD, Bhutani Infra, “For the commercial segment, we were expecting that the RBI would come up with specific announcements that could boost investment. However, we understand the status quo stance as there was limited possibility of changing the repo rate below 4%. Last substantial announcement for the commercial segment was in February when the RBI permitted an extension of date of commencement of commercial operations (DCCO) of project loans for commercial real estate. The segment is in dire need of liquidity, which also depends on the priority lending status, and we hope that the segment will get adequate liquidity as the RBI in this MPC announcement has said that it will maintain the liquidity in the market.”

Commenting on the latest stance of the RBI, Dhiraj Jain, Director, Mahagun Group, says, “The government and the bank have taken multiple steps in the last few months. If quick implementation takes place, then many problems will get resolved. One such announcement was the loan restructuring that will help stuck projects bringing in more projects in the market. The Apex bank has shown positive outlook for GDP growth in the coming quarters, and this would definitely have a healthy impact on the real estate sector too.”

In the last few months, the government and the RBI took decisions intended to move towards the path of economic recovery, and real estate was looking for packages that can help them speed up the pace. Ankur Bhatiani, Director, Urbainia Spaces says, “Though we understand the stance taken by the RBI, we still feel that real estate sector needed announcements that could have an immediate impact on delivery and sales. Now, the need is that RBI should ensure that the past announcement should get implemented with earnest. The sector has yet to see the major impact of those announcements. We hope the individual banks will take necessary steps and keep the real estate sector in their priority lending list.”

Realtors say that buyers are now back, and the sector will now depend on the delivery of the projects to instill more confidence in the market. Harvinder Singh Sikka, MD, Sikka Group, says, “We were following the various reports, and were ready for the status quo of the RBI. We feel that the sector, which contributes towards the economic growth of the country, should get special attention. The RBI should ensure that banks extend lending support to the sector.”

Dhiraj Bora, Head-Marketing and Communication, Paramount Group, adds, “We should praise the RBI for extending a helping hand to the real estate sector as it has taken care of the interest of buyers and developer in the last few announcements. Till the next announcement, the sector has to work on deliveries and employing marketing tools that can augment the increased demand.”

Education

Give your dreams a new flight from Global Summit

Nov 26, 2020 by Gouri Achary 0 Comments #Bank Management, #Bank PO, #Collector, #Global Summit, #LIC, #MPSC, #NTPC, #PCS, #RBI, #SDM, #SI, #SSC, #students, #UPSC

‘Successfactor.in’ is organizing a 2-day online global summit on 5th & 6th December to clear the confusions and provide guidance to the students preparing for the government exam. In this summit, more than 16 experts and government officials from different fields will be present, who will answer the questions asked by the students and help them solve their problems and resolve issues.

During this summit, the students will get a chance to interact with the government officials who have served the nation for decades through services like UPSC, SSC and MPSC, Bank PO, RBI, PCS, LIC, NTPC, SI, Collector, Bank Management, SDM amongst others. This summit will also give students an idea on how students should prepare for their respective examinations, in which direction should they move how the exam can be cleared in one go, etc. Students will also get an opportunity to know the answer to important questions. It can be a good opportunity for students to have so many experts together on a single platform to guide them through their road roadblocks.

Successfactor.in provides students step by step preparation for prelims, mains, such (essay) and interview etc. for UPSC and PSC. Every student is personally assisted in exam syllabus, patterns, tips and tricks, time management and study material. Successfactor.in guides students to all types of government exams. Not only this, students are also informed about the available sponsorship avenues. This is the first new initiative of its kind for hardworking students.

Business World

HDFC Bank: Views on Credit Policy by Mr. Abheek Barua, Chief Economist, HDFC Bank

Oct 10, 2020 by Gouri Achary 0 Comments #European Central Bank Governor, #HDFC Bank, #Mario Draghi, #Mr. Abheek Barua, #RBI

Today’s monetary policy was as aggressively accommodative as possible without cutting the policy rate. The decision to remain accommodative for an extended period and to look through “transient humps” in inflation reveals an appreciation for the basic principles of economics –that a GDP contraction of 9.5 per cent is simply not compatible with demand-side inflation pressures. If inflation has persisted over the RBI’s target limit, it has been driven by persistent supply-side problems. Persistence itself cannot transform a supply-driven problem to a demand-side concern amenable to monetary policy-driven containment. Given the stance, there is a significant probability of a rate cut in February, if not in December itself as inflation, as we expect, moderates.

The highlight of the policy was the RBI’s signal that it would “do whatever it takes” (a phrase immortalized by former European Central Bank Governor Mario Draghi) to align risk-free government bond yields with the fundamentals of the economy. This involved key changes such as an increase in the size of Open Market Operations and innovations like OMOs in State Government Bonds. Were these measures to succeed, as we expect them to, the upward pressure on yields that have built up on the back of heavily anticipated supply of central and state government bonds is likely to moderate.

Has the RBI gone overboard in its effort to support growth? We think not. These are unprecedented times and the Indian economy’s revival efforts are hobbled by the lack of adequate fiscal support. If monetary policy does have to do the heavy lifting, it cannot do it within the confines of a conventional “take-no-risks” framework. Conservatives will fret over both inflation and financial stability risks given the combination of a liquidity glut and an effective dilution of prudential norms for things like home loans. We believe it’s a risk worth taking.

Business World

RBI set to hold this month: Finder’s RBI repo rate forecast report

Sep 23, 2020 by Gouri Achary 0 Comments #gdp growth, #Indranil Pan, #Radhika Piplani, #RBI, #Upasna Bhardwaj

September 2020 – The RBI is expected to hold the repo rate at the September 29 meeting, according to a unanimous vote by 17 economists on Finder’s RBI repo rate forecast report.

However two panellists – Manappuram Finance chief economist, Jayesh Kumar, and Edelweiss Financial Services economist, Ankita Pathak – think the Bank should cut the rate this month by 25-50 bps.

Regardless of when it happens, 100% of panellists (16/16) say the next rate movement will be down, with several panellists suggesting there’s room for monetary easing in late 2020 or early 2021 provided inflationary pressures ease off.

Bandhan Bank chief economist, Siddhartha Sanyal, says they’re not ruling out monetary easing over the next 3-6 months.

“… we expect the CPI prints to soften during the second half of the current financial year (ending March 2021). Thus, on balance, we expect the MPC to stay on hold in the current meeting even though we do not rule out more monetary easing over the next 3-6 months.”

YES Bank economist, Radhika Piplani, thinks the MPC has room to cut the rate by up to 50 basis points in December 2020 – February 2021.

“While caution is warranted to uphold central bank’s inflation-fighting credibility, the need for continued support to grow during these unprecedented times would also reassert itself as the impact of COVID continues to play out both globally and domestically. Accordingly, we expect up to 50 bps of monetary easing to be delivered in Dec-20/Feb-21 when inflationary pressures are tamed,” she said.

GDP growth forecasts

GDP growth isn’t expected to reach positive territory until the first half of next year, according to the majority of Finder’s panel (65%).

Roha Asset Managers economist, Gauri Sharma, is part of the majority forecasting an uptick by the first half of 2021 but notes it will take sometime before we reach normality.

“I believe the first half of 2021 has been largely affected by the lockdown. Even if the lockdown is now lifted, it will take some time to get back to work. This will be even tough for the MSME segment which contributes around 38-40% towards the GDP of the country. Thus I don’t expect any positive growth in the second half of 2020 as well,” she said.

17% say GDP won’t recover until the latter half of next year while 12% say 2022 and just one panellist, the Wealth Dialogues independent researcher and writer, Mridul Mehndiratta, says it’ll be 2023 before we see positive growth.

“… with the pay cuts, job losses and low discretionary spending at least for the current fiscal year, gloomy sentiment can hinder the full-blown economic recovery over the next year.

“However, my expectation is that as people get used to the new normal, the hope for [a] vaccine in the next 6 months or so, we might see businesses going full throttle, accompanied by people overcoming their apprehensions to step out, we can start to witness upward trend by 2023,” she said.

Experts weigh in on government stimulus

Over half of the panel (65%) say the government is not doing enough to support the economy throughout the COVID-19 pandemic. Just under a quarter (23%) say they aren’t sure while 12% (2/17) think the government is pulling its weight in economic recovery efforts.

IDFC FIRST Bank chief economist, Indranil Pan, notes there is no real stimulus to the economy and thinks the government could do more.

“The government has been doing its bit for lives and livelihood – especially at the lowest end of the income pyramid. But, there is no real stimulus to the economy and most of the fiscal slippage is likely to arise due to the erosion in revenues.

“I would like to see the government addressing both the consumption as also the supply side: a) tax reductions at the lowest income brackets/tax slabs b) reduction in GST with a sunset clause for high-value items to kickstart consumption c) identify shovel-ready projects and push the accelerator hard in these projects – this will help create jobs and also create an environment for crowding-in of private investments,” he said.

Kotak Mahindra Bank senior vice president, Upasna Bhardwaj, called for more government spending.

“I think a greater focus on demand-side stimulus and increase in infrastructure spending could boost medium-term prospects for durable income growth,” she said.

Meanwhile, CARE Ratings Ltd. economist, Rucha Randive, is one of just two panellists who think the government is doing enough to support the economy.

“The government and the RBI have already announced a slew of measures to support the pandemic hit economy. However, more fiscal and monetary support is called for given the moderate pace of economic recovery and rising infection cases in the country,” she said.

You can find the full report with additional commentary here: https://www.finder.com/in/rbi-repo-rate-forecast