You are here: Home » Economy & Policy » Analysis
Business Standard

BoFA lowers GDP forecast to 7.4% for FY 17

As demonetisation of Rs 500 and Rs 1,000 notes is expected to hurt activity in December

Press Trust of India  |  Mumbai 

BoFA lowers GDP forecast to 7.4% for FY 17

Bank of America Merrill Lynch (BofA) on Monday trimmed the country's estimates by 30 basis points to 7.4% for the current financial year as of Rs 500 and Rs 1,000 notes is expected to hurt activity in December.

Besides, the global financial services major has lowered its number by 30 bps to 7.6% for the next financial year (2017-18).



At the same time, said the Reserve Bank of India (RBI) would cut rates by 25 basis points in the upcoming policy review on December 7, as the "conversion of black money into deposits allow banks to cut lending rates even in October-March busy industrial season".

said it is relieved to hear Governor Urjit Patel's comments that the banking regulator will review the (cash reserve ratio) hike as soon as the government issues an adequate quantum of MSS (Market Stabilisation Scheme) bonds.

However, it noted that as does not pay interest, banks would find it difficult to cut lending rates even if the cuts lending rates by 25 bps in December.

"With now set to shift from hikes to the standard mix of reverse repo, T-Bills, Cash Management Bills and MSS bonds, that all pay interest, we continue to expect banks to cut lending rates (by 75 bps by September 2017) that holds the key to recovery," it added.

Over the weekend, had asked banks to set aside 100% of the deposits between September 16 (weeks before the end of the income disclosure scheme) and November 11 (three days after the currency delegalisation was announced) as incremental cash reserve ratio balance with it.

In an exclusive interview with Press Trust of India, Patel had said that has announced an incremental of 100% "because of the large increase in deposits of banks on account of the return of Rs 1,000 and Rs 500 notes" and the decision would be reviewed immediately once the government issues adequate quantum of MSS bonds which they have promised to do.

RECOMMENDED FOR YOU

BoFA lowers GDP forecast to 7.4% for FY 17

As demonetisation of Rs 500 and Rs 1,000 notes is expected to hurt activity in December

As demonetisation of Rs 500 and Rs 1,000 notes is expected to hurt activity in December Bank of America Merrill Lynch (BofA) on Monday trimmed the country's estimates by 30 basis points to 7.4% for the current financial year as of Rs 500 and Rs 1,000 notes is expected to hurt activity in December.

Besides, the global financial services major has lowered its number by 30 bps to 7.6% for the next financial year (2017-18).

At the same time, said the Reserve Bank of India (RBI) would cut rates by 25 basis points in the upcoming policy review on December 7, as the "conversion of black money into deposits allow banks to cut lending rates even in October-March busy industrial season".

said it is relieved to hear Governor Urjit Patel's comments that the banking regulator will review the (cash reserve ratio) hike as soon as the government issues an adequate quantum of MSS (Market Stabilisation Scheme) bonds.

However, it noted that as does not pay interest, banks would find it difficult to cut lending rates even if the cuts lending rates by 25 bps in December.

"With now set to shift from hikes to the standard mix of reverse repo, T-Bills, Cash Management Bills and MSS bonds, that all pay interest, we continue to expect banks to cut lending rates (by 75 bps by September 2017) that holds the key to recovery," it added.

Over the weekend, had asked banks to set aside 100% of the deposits between September 16 (weeks before the end of the income disclosure scheme) and November 11 (three days after the currency delegalisation was announced) as incremental cash reserve ratio balance with it.

In an exclusive interview with Press Trust of India, Patel had said that has announced an incremental of 100% "because of the large increase in deposits of banks on account of the return of Rs 1,000 and Rs 500 notes" and the decision would be reviewed immediately once the government issues adequate quantum of MSS bonds which they have promised to do.
image
Business Standard
177 22

BoFA lowers GDP forecast to 7.4% for FY 17

As demonetisation of Rs 500 and Rs 1,000 notes is expected to hurt activity in December

Bank of America Merrill Lynch (BofA) on Monday trimmed the country's estimates by 30 basis points to 7.4% for the current financial year as of Rs 500 and Rs 1,000 notes is expected to hurt activity in December.

Besides, the global financial services major has lowered its number by 30 bps to 7.6% for the next financial year (2017-18).

At the same time, said the Reserve Bank of India (RBI) would cut rates by 25 basis points in the upcoming policy review on December 7, as the "conversion of black money into deposits allow banks to cut lending rates even in October-March busy industrial season".

said it is relieved to hear Governor Urjit Patel's comments that the banking regulator will review the (cash reserve ratio) hike as soon as the government issues an adequate quantum of MSS (Market Stabilisation Scheme) bonds.

However, it noted that as does not pay interest, banks would find it difficult to cut lending rates even if the cuts lending rates by 25 bps in December.

"With now set to shift from hikes to the standard mix of reverse repo, T-Bills, Cash Management Bills and MSS bonds, that all pay interest, we continue to expect banks to cut lending rates (by 75 bps by September 2017) that holds the key to recovery," it added.

Over the weekend, had asked banks to set aside 100% of the deposits between September 16 (weeks before the end of the income disclosure scheme) and November 11 (three days after the currency delegalisation was announced) as incremental cash reserve ratio balance with it.

In an exclusive interview with Press Trust of India, Patel had said that has announced an incremental of 100% "because of the large increase in deposits of banks on account of the return of Rs 1,000 and Rs 500 notes" and the decision would be reviewed immediately once the government issues adequate quantum of MSS bonds which they have promised to do.

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard