Connect with us

Business

Reserve Bank of India faces trouble getting banks to cut rates

Published

on

Lenders haven’t fully passed on the central bank’s latest interest rate cut to borrowers, pressuring the monetary authority to loosen policy even more to support economic growth.

A mismatch between deposits and credit growth, and competition from the government for small-savings mean banks face a high cost of capital, limiting their ability to transmit monetary policy easing. Bankers say the Reserve Bank of India’s 25 basis-point reduction in the repurchase rate to 6.25 % in February was a start, but was probably too little to have any impact on lending rates just yet.

Latest data from the central bank shows the main overnight lending rate offered by commercial banks has been sticky in a range of 8.15 percent to 8.55 percent since the beginning of the year. Most banks have trimmed lending rates by a ‘token’ 10 basis points, said Ashutosh Khajuria, chief financial officer at Federal Bank Ltd. in Mumbai, adding that the RBI needs to move by a bigger-than-usual 50 basis points to spur lending.

“If it is a 50 basis points cut, it will be an accelerated transmission,” Khajuria said. “If inflation behaves the way it has been,” rates will certainly go down in the first quarter of the next financial year starting April.

Subdued Inflation

Calls for rate cuts have been building, given benign inflation and weak demand. Inflation has been subdued at about 2 %, much lower than the central bank’s medium-term target of 4 percent. The latest inflation data is due on Tuesday, with economists surveyed by Bloomberg forecasting consumer prices to rise 2.4 %.

Shaktikanta Das, the new RBI governor, has been trying to nudge bankers to lower lending rates, holding meetings with bank chiefs last month to discuss the monetary policy transmission. In India, rate adjustments take about six to nine months to work its way through the economy.

The State Bank of India, the country’s largest bank, Friday linked some of its deposits and and short-term loans to the repurchase rate. Its managing director P.K.Gupta told Bloomberg Quint that a quarter percentage repo rate change will have an impact of 7-10 basis points on the bank’s floating lending rate.

Most bankers remain cautious though and “are not willing to cut rates as deposits and household financial savings are at historical lows,” said Prachi Mishra, chief India economist at Goldman Sachs India Securities. “Even while policy rates are down, the rates paid by the government on small savings are significantly higher than bank deposit rates.”

Savings programs offered by the government through post offices return between 7 percent and 8 percent annually along with tax benefits, while a one- to two-year time deposit with the State Bank earns an interest of 6.8 percent.

Bank deposits are also growing at a slower pace than loans, putting pressure on commercial lenders to offer attractive rates to lure depositors and boost resources to lend, analysts say. While bank lending has been growing at more than 14 % year-on-year as of February, deposit growth has been a laggard at 10 %, according to central bank data.

“We believe the monetary transmission in terms of banks’ lending and deposit rates will be partial and delayed due to a wide gap between credit and deposit growth,” said Tanvee Gupta Jain, an economist at UBS Securities India Pvt.

The problem is unlikely to go away soon, posing a headache for banks already struggling with soured loans and tight financial conditions.

“When you’re thinking of mobilizing deposits, you can’t cut interest rates. The entire problem on monetary policy transmission lies there,” said Khajuria of Federal Bank.

Source

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published.

Brand Story

Zepto, 10-minute grocery delivery app, raises $100 million

Published

on

Only five months subsequent to dispatching, 10-minute basic food item conveyance application Zepto on Tuesday reported it has raised $100 million driven by Y Combinator, taking its valuation to $570 million.

Other than the raise money, Zepto has been developing staggeringly rapidly and is significantly increasing its client base consistently.

In the course of recent months, Zepto has extended past Mumbai by dispatching in Bengaluru, Delhi, Gurgaon, Chennai, Hyderabad, and Pune (Kolkata to follow), the organization said in an assertion.

“Financial backers are reliably deciding to back Zepto due to our top tier execution. This is giving us extraordinary energy – we’re developing at an amazing rate, clients are adoring the item experience, our center unit financial matters are solid, and we have one of the most outstanding startup groups in India today,” said Aadit Palicha, Co-Founder and CEO.

The Series C raising money round saw support from new and existing financial backers, including Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital, Contrary Capital, and that’s just the beginning.

The round came 45 days later the organization reported its $60 million raise money in November.

Conveying food in a short time is a game-changing encounter for clients in the nation, and a few players are presently joining the race.

“We are eager to twofold down and lead this round in Zepto. They initially dispatched with an alternate model, quickly turned to speedy trade in August 2021, and are presently adding 100,000 new clients consistently, 60% of the ladies,” said Anu Hariharan from Y Combinator.

Continue Reading

Business

One stuck box of fertilizer shows the global supply chain crisis

Published

on

Somewhere in the world’s busiest port of Shanghai, a container of fertilizer sits among tens of thousands of boxes, waiting for a ride to the U.S. It’s been on the dock for months, trapped by typhoons and Covid outbreaks that have worsened major congestion in the global supply-chain network.

While the fertilizer has been stranded there since May, the port is just one stop on the long journey from central China to the U.S. Midwest. Delays have stretched a delivery that ordinarily would take weeks to more than half a year. And that time frame will keep expanding, as the goods have barely started the roughly 15,000 kilometer (9,300 mile) trek.

This is the tale of one humble shipment and its arduous journey across the world. While some of the barriers keeping it from its final destination may be specific to this particular case, the journey is emblematic of the inertia that has gripped global trade during the pandemic.

From the U.S. to Sudan to China, container boxes have been lying at ports, railyards and in warehouses as the pandemic rages on. In an industry with 25 million containers and some 6,000 ships hauling them, it’s easy to see disruptions as one big headache confined to the shipping world. But each container that’s delayed is economic activity that’s restrained, heaping costs one box at a time on consumers and making it more challenging to put corn on consumers’ tables or deliver presents for the holidays.

It’s also a lesson in the ripple effects across global supply chains, showing the limits of diversification as all networks are still closely connected with China.

“All roads lead back to China, and that has a major effect across the entire supply chain,” said Dawn Tiura, head of U.S.-based Sourcing Industry Group. “Congestion at one port or factory has far-reaching implications for neighboring facilities, which trickles out across the world.”

Continue Reading

Business

Bharat Biotech’s BBV154 leads global race for intranasal COVID-19 vaccine

Published

on

Bharat Biotech’s nasal COVID-19 vaccine candidate BBV154 has become the front runner globally to likely commercialise an intranasal vaccine, following green signal from the government to conduct a combined Phase II and III final clinical trials in India. At present out of the 110 vaccines under clinical development globally, only eight are intranasal vaccines and three are oral vaccines. So far none of these vaccines have entered the final phase of trials and most are still in the first phase.

BBV154 is an intranasal replication-deficient chimpanzee adenovirus SARS-CoV-2 vectored vaccine, in-licensed from the Washington University in St Louis, USA. Nasal and oral vaccines are expected to be a game-changer second-generation COVID-19 vaccine, as they stimulate a broad immune response and prevent both infection and transmission. The non-invasive, needle-free vaccines do not require trained health care workers to administer the vaccine, have no risks of injuries and infections and is suited for children and adults. Unlike Covaxin, which is difficult to make, manufacturing can be scaled up fast and easily.  Compared to injectable vaccines, nasal and oral vaccines are expected to provide long-lasting protection.

Bharat Biotech is yet to announce its plans and timeline for the nasal vaccine’s future development.

Serum Institute of India and Codagenix have done a 48-subject Phase I clinical trial in the UK for an intranasal COVID-19 vaccine, COVI-VAC. This live attenuated candidate vaccine is expected to have potential to provide a broader immune response, in comparison to most COVID-19 vaccines that target only a portion of the virus. Codagenix has recently completed dosing for its Phase I trials and data is expected to come out in the third quarter of the year.

Nasdaq listed US biopharmaceutical company Altimmune, which was developing a three-dose intranasal vaccine candidate  AdCOVID, discontinued the project on July 29, as its first phase trials did not stimulate an adequate immune response in healthy volunteers. “The top-line Phase 1 clinical data are disappointing given the encouraging preclinical data and our substantial efforts in advancing a differentiated, intranasal vaccine candidate in the fight against COVID-19,” said Vipin K Garg, Altimmune’s India born President and Chief Executive Officer.

The University of Hong Kong, Xiamen University and Beijing Wantai Biological Pharmacy in China are trying a Phase II clinical trial of a two-dose influenza virus vector COVID-19 vaccine as an intranasal spray (DelNS1-2019-nCoV-RBD-OPT1). Its one year long second phase trial among 240 volunteers is going on and will conclude only by mid-December 2021.

The University of Oxford is conducting a single dose Phase I study of AstraZeneca’s ChAdOx1 nCOV-19 (Covishield in India and manufactured by the Serum Institute) to be administered intranasal among 54 volunteers in three groups. According to the trial design, the study started in April is estimated to complete the first phase only by February 2022.

Cuban government’s Center for Genetic Engineering and Biotechnology, which developed Latin America’s first COVID-19 vaccine Abdala, is undertaking a Phase I/II study of an intra-nasal three dose protein subunit vaccine candidate Mambisa (CIGB-669). According to the research agency, Mambisa is based on the formulation of the RBD (Receptor Binding Domain) protein and an immuno enhancer, Hepatitis B nucleocapsid antigen.

Canadian biotech Symvivo Corporation has ‘bacTRL-Spike’, as an oral capsule DNA vaccine candidate for the prevention of COVID-19, is undergoing Phase I trials in Australia. The trial was started only in November, last year. The global drug major Merck, known as MSD outside the United States and Canada, has taken exclusive license of Symvivo’s bacTRL platform of oral vaccines.  Symvivo has funding of about $4.57 million from the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP) to develop this vaccine.

US biotech Meissa Vaccines’s MV-014-212, a single dose intranasal recombinant live attenuated COVID-19 vaccine, is undergoing Phase I trials and its interim trial data will come out by the end of this year. Another small US biotech, Vaxform and the US Specialty Formulations LLC (USSF) are developing an oral COVID-19 vaccine, which is also in its first phase. Similarly, another US small biotech CyanVac LLC is also attempting an intranasal parainfluenza virus based COVID-19 vaccine (CVXGA1), now in the first phase and its results are also expected only by the end of the year.

Mexican veterinary pharmaceutical company Laboratorio Avi-Mex is testing a live influenza virus based vaccine, both as an intranasal spray as well as an injection. It is starting Phase I trials and is funded by Mexico’s foreign ministry and the National Council of Science and Technology (Conacyt). The Mexican authorities hope to commercialise this vaccine by the end of the year.

Continue Reading

Newsletters

Enter your email address to get latest updates

Advertisement

Trending

Copyright © 2018 - 2022 Delhi Wire.