RBI may conduct VRR auctions in March

  • The Reserve Bank of India (RBI) may conduct a series of variable rate repo (VRR) auctions for the better part of March, to deal with possible liquidity outflows from the banking system arising from banks participating in a scheduled forex swap, reversal of a forex swap conducted three years back, and enhanced Treasury Bill auctions, among others.
  • That liquidity could come under pressure is underscored by the fact that RBI is scheduled to conduct a two-year forex swap auction on March 8, 2022, whereby it will sell $5 billion and suck out the equivalent amount of Rupee liquidity amid volatility in the forex market.
  • Further, on March 28, the buy (USD)-sell (INR) forex swap auction that RBI had conducted in 2019 for $5 billion will get reversed, whereby RBI will sell USD and absorb Rupee liquidity for an equivalent amount.
  • Moreover, as per the revised calendar for auction of Treasury Bills for March, the Government will be raising ₹60,000 crore more.
  • So, roughly, around ₹1.30 lakh crore will be sucked out of the banking system in March due to the aforementioned transactions. If one takes into account advance tax outflows, this figure could rise by about ₹1 lakh crore.
  • While on the one hand liquidity will get sucked out, on the other hand, rupee liquidity could be created due to foreign investors pumping in Dollars for investment in the proposed initial public offer of the Life Insurance Corporation of India and release of ₹4.91 lakh crore absorbed by RBI under the variable rate reverse repo (VRRR) auction on maturity on March 25, 2022.
  • RK Gurumurthy, Treasurer, Dhanlaxmi Bank, observed that from March 8th onwards, money markets could tighten because there will be advance tax outflows from the system.
  • “RBI will operationalise Variable Rate Repo (VRR)…..RBI Governor’s February 10th statement had referred to VRRR and VRR. I am quite sure, we will see VRRR and VRR active for the whole of March,” he said.
  • RBI had last conducted a VRR auction (one-day) on January 24, 2022, at a weighted average rate (WAR) of 4.13 per cent.
  • Gurumurthy expects the weighted average rate (WAR) of VRRR to go up to 4 per cent before the April 2022 bi-monthly monetary policy from 3.87 per cent as on February 4, 2022 (mentioned by the Governor on February 10th) and WAR of VRR to be at about 4.40 per cent.
  • “So, arithmetically, they (RBI) don’t need to hike rates. They would have operationalised higher short term rates. We will see lot of VRR auctions in the next four weeks,” he said.

Home loan demand expected to hit pre-covid levels this year

This is despite the industry expecting special offers to end from April with a rise in interest rates With interest rates at historic lows, demand for home loans is set to overtake pre-pandemic levels this year. The banking industry expects demand to pick up even if the interest rates are increased later this year as demand for housing continue to be robust.
“There is a strong demand for homes, which started during the pandemic as people realised the need for bigger homes. It is expected to continue and is also a good growth opportunity for more lenders. With interest rates expected to go up, there will be a marginal impact on rates,” said a banker.
HDFC Ltd Chairman Deepak Parekh too had recently pointed out that interest rates are still at historic lows, so a minor increase would not have an impact on the demand for home loans.
Though a number of lenders continue to offer attractive interest rates and other incentives, players said that many have started tightening norms so that only the best of customers get the lowest rates. “Interest rates for home loans have been the lowest in the last one year at about 6.5 per cent but a few banks have begun to marginally increase rates. The low rates are being offered to the best of customers, which include those with high Cibil scores, salaried borrowers. So it is just a handful of customers who are enjoying the low rates,” said Ratan Chaudhary, Head of home loans at He said it is expected that from April onwards, rates across banks might increase marginally as typically, home loan rates start coming down from the festive season— from October to March.
“But despite the increase in rates, we expect the demand for home loans to continue. In fact in calendar year 2022, we expect total number of home loans to cross the pre-Covid level,” he said. Pramod Kathuria – Founder and CEO, Easiloan also noted that banks are no longer adopting an aggressive strategy such as offering processing fee waiver or additional incentives. “Typically, the fourth quarter of the fiscal is the high activity period for home loans. Anything on the rate front will come post March,” he said. However, he expects the demand for home loans to remain robust. “The surcharge on stamp duty is also likely to come back from April 1 and the interest rates will start inching up. But all this will have a short term knee jerk reaction,” he said.
Lenders home loan portfolio Most lenders continue to be keen on growing their home loan portfolio and perceive it as a growth area with minimal defaults. On February 18, Bajaj Housing Finance had extended its festive offer with home loan rates starting at 6.65 per cent per annum for eligible applicants who apply through the official website till February 28, 2022.
Similarly, Standard Chartered Bank, India has launched the ‘interest-only home loan’ facility for completed residential properties. Where during the initial period, borrowers pay only for the interest accrued on the principal outstanding. India’s residential real estate saw a 71 per cent rise in sales year-on-year (y-o-y) in 2021 (January-December) with nearly 2.37 lakh units being sold across the seven key markets that include Delhi-NCR, Mumbai, Chennai, Bengaluru, Hyderabad, Pune and Kolkata. The sales at the end of 2021 stood at 90 per cent of pre-Covid levels (2019).

Retail Banking vs. Corporate Banking: What's the Difference?

  • Retail banking refers to the division of a bank that deals directly with retail customers while corporate banking is the part of the banking industry that deals with corporate customers. Retail banking is the visible face of banking to the general public, with bank branches located in abundance in most major cities. Corporate banking, on the other hand, works directly with businesses to provide them loans, credit, savings accounts, and checking accounts which are specifically designed for companies rather than for individuals.
  • Retail banking is the division of a bank that deals directly with retail customers.
  • Retail banks bring in customer deposits that largely enable banks to make loans to their retail and business customers.
  • Corporate banking refers to the aspect of banking that deals with corporate customers.
  • Commercial banks make loans that enable businesses to grow and hire people, contributing to the expansion of the economy.
  • Both types of banks offer various products and services.
  • Retail banking provides financial services to the general public. Also referred to as consumer or personal banking, this side of the industry allows consumers to manage their money by giving them access to basic banking services, credit, and financial advice.
  • Retail banking encompasses a wide variety of products and services including:
  • Checking and savings accounts
  • Certificates of deposit (CDs)
  • Mortgages
  • Automobile financing
  • Credit cards
  • Lines of credit such as home equity lines of credit (HELOCs) and other personal credit products
  • Foreign currency and remittance services
  • Retail banking clients may also be offered the following services, generally through another division or affiliate of the bank:
  • Stock brokerage (discount and full-service)
  • Insurance
  • Wealth management
  • Private banking
Retail Banking
  • The level of personalized retail banking services offered to a client depends on their income level and the extent of their relationship with the bank. While a teller or customer service representative would generally serve a client of modest means, an account manager or private banker would handle the banking requirements of a high-net-worth individual (HNWI) who has an extensive relationship with the bank.
  • Although brick-and-mortar branches are still necessary to convey the sense of solidity and stability that is crucial to banking, retail banking is perhaps one area of banking that has been most impacted by technology, thanks to the proliferation of automated teller machines (ATMs) and the popularity of online and telephone banking.
Corporate Banking
  • • Corporate banking, also known as business banking, typically serves a diverse clientele, ranging from small- to mid-sized local businesses with a few million in revenues to large conglomerates with billions in sales and offices across the country. The term was originally used in the United States to distinguish it from investment banking after the Glass-Steagall Act of 1933 separated the two activities.
  • • While that law was repealed in the 1990s, corporate banking and investment banking services have been offered for many years under the same umbrella by most banks in the United States and elsewhere. Corporate banking is a key profit center for most banks. But as the biggest originator of customer loans, it is also the source of regular write-downs for loans that have soured.
  • Commercial banks offer the following products and services to corporations and other financial institutions:
  • Loans and other credit products
  • Treasury and cash management services
  • Equipment lending
  • Commercial real estate
  • Trade finance
  • Employer services
  • Through their investment banking arms, commercial banks also offer related services to their corporate clients, such as asset management and securities underwriters.

Specialities you have if you studied business administration.

  • Human Resources
  • Accounting
  • Marketing
  • Entrepreneurship
  • Management

A Bachelor’s in Business Administration degree offers several great specialties for students who would like to concentrate their studies in one area of business. Whether business students may be interested in marketing, human resources, or accounting, there is sure to be a specialty that will suit their occupational aspirations. The following five business administration specialties are some of the most popular today and provide excellent starting salaries.

1. Human Resources

A very popular specialty for persons working towards a Bachelor’s in Business Administration is human resources. Human resource professionals are those persons who handle most everything associated with employees. Students, who choose this specialty will learn how to post advertisements for open positions, select and interview applicants, train new hires, and handle employee disputes. They will also learn about the laws on hiring, promotions, and discrimination.

2. Accounting

Another great specialty with a Bachelor’s in Business Administration degree in accounting. This specialty is excellent for students who enjoy working with numbers. All businesses need trained accountants to maintain their books and keep track of their funds. If students choose this specialty, they will learn how to maintain a business’s books, keep track of profits and losses, file state and federal income taxes, maintain company budgets, handle payroll, and prepare financial reports. According to the United States Bureau of Labor Statistics, these positions are currently in high demand.

3. Marketing

Marketing is yet another popular specialty for students enrolled in Bachelor’s in Business Administration programs. This area of business focuses on promoting and advertising a company’s products or services. Courses required for this specialty will teach students how to select target audiences, determine strategies to attract their targeted audiences, create marketing plans, determine pricing, understand the concepts of supply and demand, maximize a business’ profits, and increase a company’s market share.

4. Entrepreneurship

A specialty for Bachelor’s in Business Administration degrees that is growing in popularity today is entrepreneurship. While many people who choose this specialty are those who are looking to start their businesses, some people choose entrepreneurship so that they can help companies succeed by using new technologies or by offering new products or services. Students choosing this specialty will learn how to create new products or services, select target audiences, request funding for idea creation, and present their ideas to management.

5. Management

Management is yet another terrific specialty for Bachelor’s in Business Administration degrees. Just as businesses need trained professionals in the four areas discussed above, they also need strong and effective leaders. Students, who declare this specialty will learn how to plan employee schedules, coordinate the work of employees and teams, supervise and motivate employees, make critical decisions, handle customer complaints, and handle employee disagreements and disputes. This specialty is perfect for individuals who have excellent communications and leadership skills.

The world of business offers many fantastic job opportunities for business administration graduates. And for those students who would like to step outside of the general bachelor’s in business administration degree programs, one of the five specialties described above may be just what they are looking for.

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