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RBI Restores Bond Market Timings; What Investors Should Know

By: Aparna Deb

News18.com

Last Updated: December 07, 2022, 11:36 IST

New Delhi, India

The RBI on Wednesday lowered FY23 GDP growth forecast to 6.8 per cent from 7 per cent earlier

The RBI on Wednesday lowered FY23 GDP growth forecast to 6.8 per cent from 7 per cent earlier

The RBI on Wednesday lowered FY23 GDP growth forecast to 6.8 per cent from 7 per cent earlier

Reserve Bank of India Governor Shaktikanta Das, while reading out decisions taken by the rate-setting panel on monetary policy announced that the RBI in its move towards normal liquidity operations on Wednesday decided to restore market hours - from 9.00 am to 5.00 pm - in respect of call/notice/term money, commercial paper, certificates of deposit, and repo in corporate bond segments of the money market as well as for rupee interest rate derivatives.

Das said, “As part of our gradual move towards normal liquidity operations, we have decided to restore market hours - from 9.00 am to 5.00 pm - in respect of call/notice/term money, commercial paper, certificates of deposit and repo in corporate bond segments of the money market as well as for rupee interest rate derivatives."

“The extension of time for HTM categorisation of fresh Bank investments in bonds till March 2024, paves the way for stability in the bond market /Financial sector and future Government Borrowing. Overall pragmatic revisions of the monetary policy by RBI considering the uncertainties and volatility both at domestic and international fronts," said Divam Sharma, Co-Founder at Green Portfolio.

Meanwhile, RBI’s Monetary Policy Committee on Wednesday raised the repo rate by 35 basis points (bps) to 6.25 per cent with immediate effect, making loans expensive. The policy rate is now at the highest level since August 2018. The RBI has maintained policy stance at ‘withdrawal of accommodation’.

The RBI on Wednesday lowered FY23 GDP growth forecast to 6.8 per cent from 7 per cent earlier. The central bank has, however, retained its retail inflation projection for FY23 at 6.7 per cent.

Also, both standing deposit facility (SDF) and marginal standing facility (MSF) rates have also been increased by 35 basis points each to 6.00 per cent and 6.50 per cent, respectively. The SDF is the lower band of the interest rate corridor, while the MSF is the upper band.

The bank rate has also risen from 6.15 per cent to 6.5 per cent now.

This is the fifth consecutive repo rate hike this year. With this latest hike, the RBI’s rate-setting panel has raised the key policy rate by 225 basis points this year in total, in order to control inflation. The repo rate is the interest rate at which the RBI lends to the commercial bank.

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first published:December 07, 2022, 11:35 IST
last updated:December 07, 2022, 11:36 IST
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