News digest: Monetary policy review, stock markets, IL&FS crisis, and more

RBI keeps policy rates unchanged, shifts stance to 'calibrated tightening'

The Reserve Bank of India (RBI) on Friday surprised the markets by keeping the policy rates unchanged even as it shifted its stance to “calibrated tightening”.

The central bank indicated it was in no mood to stop the rupee slide in order to improve the country’s export competitiveness.

The six-member monetary policy committee (MPC) of the RBI voted five to one to maintain the status quo.

Chetan Ghate voted for a rate hike while Ravindra Dholakia voted to keep the policy stance unchanged at “neutral”.

The policy rate stands at 6.50 per cent, and will only go up from here. At its peak in this cycle, the policy rates were at 8 per cent in January 2015. The RBI moved to the neutral stance from “accommodative” in the February 2017 policy. Read more 

Rupee better than other emerging markets peers: RBI governor Urjit Patel

The Indian rupee has performed better than other emerging markets peers, Reserve Bank of India (RBI) Governor Urjit Patel said, even as the currency crossed 74 against the dollar after the central bank kept the policy rates unchanged. Patel indicated the RBI would let market forces decide an appropriate level for the rupee.

The RBI governor said the rupee had come under pressure because of external factors, but India’s foreign exchange reserves of $400 billion were enough to take care of 10 months of import. Read more 
 

Sensex falls 792 pts, rupee breaches 74-mark as RBI holds key lending rates

The benchmark Nifty on Friday fell the most in nearly two years and the rupee slid past 74 against the dollar after the Reserve Bank of India (RBI) kept the policy rates unchanged. The pause surprised the Street as it was expecting a hike to stem the fall in the currency. The Sensex plunged as much as 967 points intra-day amid a sharp sell-off in financial stocks. It, however, partially recovered to close at 34,377, down 792 points, or 2.25 per cent over the previous close.

The Nifty50 fell 2.7 per cent, the most since November 11, 2016, to end at 10,316.45.

The RBI was seen deviating from the path taken by its counterparts in Indonesia and the Philippines. Many emerging markets have taken aggressive steps to support their currencies, roiled by surging US bond yields and a stronger dollar. Read more 
 

Govt seeks immunity for new IL&FS board from civil, criminal proceedings

TThe government has sought immunity for the new board of Infrastructure Leasing & Financial Services (IL&FS) from any civil or criminal proceedings for decisions and actions taken by the ousted board. Counsel for the Ministry of Corporate Affairs (MCA) has petitioned the National Company Law Tribunal (NCLT), Mumbai, to this effect.

In the Satyam scam as well, the erstwhile Company Law Board (CLB) had provided similar immunity to the new board. At that point, the CLB had observed that since the appointment of the new board was approved by it, its members would be like court officers. It had ordered that no punitive action against the new board of Satyam could be taken. Read more 
 

ONGC takes a hit on equity investment in HPCL, Indian Oil over fuel subsidy

Public sector energy major Oil and Natural Gas Corporation (ONGC) has turned out to be the biggest loser in the central government's latest fuel subsidy policy.   

The government's decision to ask state-run oil marketing companies (OMCs) to share part of the subsidy has not only hit the ONGC stock, but it has also affected the value of its investment in companies like Indian Oil, Hindustan Petroleum Corporation (HPCL), and Gail (India). Shares of ONGC declined about 17 per cent this week. Read more