MPC external member Ram Singh signaled that a repo rate hike is not on the cards for now, tying the decision to whether inflation triggers second-round effects. He expects the West Asia conflict to ease, which could moderate price pressures, while saying forex reserves remain adequate and open market operations will support liquidity. Growth, he adds, stays resilient despite supply risks.
Sebi has relaxed settlement norms for foreign portfolio investors in the cash market by allowing net settlement of funds. The change permits netting of outright transactions while keeping safeguards intact, aiming to reduce liquidity requirements and streamline operations. Officials expect this to lower trading friction and make Indian markets more attractive for global investors.
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The RBI has conducted special audits to verify whether Indian banks are meeting liquidity criteria, essentially checking that their balance sheets hold up under regulatory expectations. The move signals the central bank’s focus on compliance and risk monitoring, using targeted reviews to confirm banks are following liquidity rules rather than assuming they are.
Indian government bonds held steady as traders digested a heavy supply event: a large sale of the benchmark 10-year note. Attention then shifted to the auction results, with expectations that yields could rise. At the same time, easing liquidity dragged overnight index swap rates lower, while concerns over high oil prices tied to a fragile US-Iran ceasefire kept risk sentiment cautious.
Even without a fresh RBI push for rate hikes, some banks are increasing deposit interest rates. The reason, according to the report, is RBI’s focus on systemic stability, which is nudging banks to strengthen balance sheets by attracting more deposits. As competition for funds rises, banks may offer higher rates to keep liquidity comfortable.
An asset management company is planning to launch a ₹1,000 crore bond issue, aiming to be among the first movers in the debt market. The strategy banks on current liquidity conditions and signs of early investor interest, positioning the issuer to capture demand ahead of competitors.
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In a sharp message, the RBI argued that weak growth can’t be blamed on monetary policy alone. It pointed to its decision to avoid cutting rates by 35 bps or more, signaling that liquidity availability is not the binding constraint on growth. The stance seeks to limit the idea that more monetary easing would automatically translate into stronger economic performance.
Several small-cap mutual funds that had temporarily restricted inflows due to stretched valuations and high liquidity are now reopening, but not uniformly. Some have lifted gates, while others—especially larger funds—remain closed, citing capacity limits and liquidity risks. Investors are urged to treat these moves as disciplined risk management, not signals to time the market.
Indian companies are cutting back on overseas bond issuance as domestic liquidity improves and a weaker rupee makes local borrowing more appealing. With funding costs and currency dynamics turning in favor of onshore markets, issuers are favoring local fundraising over foreign capital. The shift signals how quickly corporate debt strategies are responding to market conditions.
Banks that traditionally relied on deposits and wholesale funding to drive lending are increasingly parking money in mutual funds. The move helps manage returns and liquidity but also puts banks in direct competition for investors’ savings, where mutual fund investments can replace or reduce demand for bank deposits and loans. The result: a reshaped financial landscape.
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