India’s Top 500 Value Creators 2023
16 | India’s Top 500 Value Creators 2023 [ INDIAN ECONOMY UPDATE ] CPI inflation hovering above the RBI’s upper tolerance level (6%) during FY23 Source: RBI Between May 2022 to February 2023, RBI hiked the repo rate six times, taking the policy rate from4% in April 2022 to 6.5% by the end of FY23. The RBI also introduced Standing Deposit Facility in April 2022 at 25 basis points (bps) below the repo rate as the new floor of the liquidity adjustment facility (LAF) corridor, thereby allowing effective liquidity management in a collateral- freemanner. InMay 2022, cash reserve ratio (CRR) was increased by 50 bps to 4.5%, thereby withdrawing excess liquidity from the banking system. The monetary tightening measures taken by the RBI resulted in higher lending anddeposit rates of scheduled commercial banks. Despite hike in lending rates credit disbursement grew in FY23. Growth in investment helped drive non-food credit which grew by 15.4% in FY23. The increase in bank credit can also be attributed to increased bond yields with 10- year bond yield averaging at 7.3% in FY23 as against 6.5% in FY22 and moderation in overseas fund raising amidst increased interest costs. During FY23, ECB registrations fell by one- third to US$ 26.6 bn as the cost of ECB loans soared by 516 basis points during FY23. Non-food credit grows despite rise in interest rate Source: RBI Dun & Bradstreet
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