"The economy is going through a very difficult patch and business confidence has plummeted. New investments have slowed down," Assocham President Rajkumar Dhoot said during his interaction with RBI Governor D Subbarao ahead of the central bank's monetary policy review scheduled on April 17.
India grew at 6.7 per cent in 2008-09. For the current fiscal 2009-10, the Economic Survey projected a 7 per cent growth rate plus/minus 0.75 per cent.
The RBI's assessment of the economy, presented as a prelude to the policy announcement, was relatively downbeat. Conceding the persistence of a hostile global environment and domestic weakness, the RBI expects GDP growth during 2009-10 to be 6 per cent. This is slightly higher than the 5.7 per cent that reflects the median of its external forecasters' survey.
Mirroring weak cues from the overseas markets, the Sensex opened with a negative gap of 215 points at 10,765. The index thereafter tried to recover but slipped to lower levels after the Reserve Bank of India (RBI) announced its annual credit policy.
Within hours of RBI slashing the Cash Reserve Ratio (CRR) by 0.25 per cent, State Bank (SBI) on Tuesday hinted at a likely reduction in lending rates soon.
Bankers on Tuesday ruled out any immediate reduction in lending rates, saying any step in that direction will be determined by the cost of funds.
The RBI has announced its credit policy last week and auto financiers believe that consumers should 'wait and watch' before the interest rates on auto loans settle down.
When costs go down, interest rates will go down, says managing director and CEO Aditya Puri.
RBI slashes repo and reverse repo rates to all-time lows.
The Reserve Bank of India, which has already raised the cash reserve ratio (CRR) thrice since December last year, is contemplating another hike, though only on incremental deposits this time.
The NSE Nifty ended at 3,044, up 158 points. The market breadth was fairly positive with over three advancing stocks for every declining share - out of 2,652 stocks traded, 1,970 advanced, 633 declined and the rest were unchanged today.
The interest rate is the RBI's best bet for keeping the economy close to the 'normality' benchmark.
Real interest rates yet to touch highs witnessed in mid-90s.
Mukherjee advised European and American policymakers to follow regulatory mechanism on the lines of the Indian banking system.
Finance Minister P Chidambaram says stock market fall not a cause for worry.
Reserve Bank on Tuesday kept the bank rate and CRR unchanged, but hiked repo and reverse repo rate by 0.25 per cent to 5.5 per cent and 6.5 per cent respectively as part of measures to rein in inflation.
The indications are all there but it will still be a few days before banks start raising lending rates that affect your equated monthly instalments (EMI).
In a late Tuesday evening development, RBI raised the repo rate, or the rate at which it lends to banks, by 50 basis points to 8.50 per cent. The cash reserve ratio, or the proportion of deposits kept with the central bank, will be increased by 50 basis points to 8.75 per cent.
A bill to amend Banking Regulation Act, which will enable RBI to lower the mandatory limits on statutory liquidity ratio for commercial banks, will be introduced in Parliament soon.
"The government has always believed in stable policies. I am sure that this will continue in the coming budget," ICICI Bank's non-executive chairman, K V Kamath, told reporters on the sidelines of a function organised by the Institute of Chartered Accountants of India in Mumbai.
Though the Reserve Bank of India decided to reduce the risk weight for home loans between Rs 20 lakh (Rs 2 million) and Rs 30 lakh (Rs 3 million) to 50 per cent, the possible benefit for banks seems to be more than neutralised by 75 basis point rise in cash reserve ratio and increase in the cost of resources, which is linked to yields on government bonds and competition, bankers said.
The Reserve Bank of India on Tuesday hiked the cash reserve ratio by 25 basis points.
State Bank of India Chairman Pratip Chaudhuri says though Friday's cash reserve ratio cut will help ease short-term rates, liquidity may continue to be tight and, hence, a further 25-bp (basis point) cut in CRR can be expected.
Home loans and consumer goods loans are likely to remain high as the Reserve Bank of India kept its key policy rates unchanged during its Monetary Policy review on Tuesday.
Since the burden of 'reserve' tax has fallen primarily on SMEs as they depend on bank finance, a further hike in its Cash Reserve Ratio will definitely hit the SMEs and small savers.
'Investors' decisions should reflect their financial goals, risk tolerance, and the amount of gold already present in their portfolio.'
This is the first official data on inflation after RBI announced its mid-term monetary review in which it raised cash reserve ratio by 50 basis points to suck out excess liquidity. While retaining its forecast for inflation at five per cent this fiscal, RBI lowered its objective for the medium-term to three per cent against 4-4.5 per cent as announced in the last quarterly review in July.
The Reserve Bank of India (RBI) may opt for a 25 per cent cut in the repo rate, to prop sagging demand in the interest rate-sensitive durables sector in the mid-term review of its 2007-08 monetary policy on October 30.The likely reduction in the repo rate would take place despite concerns about inflation, which suggest that interest rates can be left unchanged, banking sources said.
The MSS limit has been raised from Rs 1,50,000 crore (Rs 1,500 billion) in the current financial year. This is the fourth time the government has raised the limit.
Bankers have said that lending rates could go up to 0.5 per cent after the Reserve Bank's annual credit policy, which is widely expected to take stringent monetary measures to contain price rise. Many expect the central bank to effect a hike in cash reserve ratio (CRR), the rate of amount all commercial banks need to keep with the Reserve Bank, in its annual credit policy on April 29. Many banks, including SBI, had revised their lending rates downwards early this year.
Cash Reserve Ratio (CRR) is the amount of funds that the banks have to keep with the Reserve Bank of India. If RBI decides to increase the percent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks.
At Rs 30.88 lakh crore, the currency with the public is 71.84 per cent higher than the level for the fortnight ended November 4, 2016.
For the last two years, the home loan borrower has been facing the brunt of high interest rates
If India sustains long-term growth, you could make good money off the stock market.
Industry on Tuesday hailed Reserve Bank of India's softening of interest rates in the Credit Policy 2003-04 and \n\nhoped it would lead to further cuts in lending rates of banks giving enough incentives to spur industrial production.
The RBI, had, earlier in the day, hiked CRR by 0.75 per cent in two tranches, a move, it said, would help flush-out Rs 36,000 crore (Rs 360 billion) from the system.
Here are the 10 biggest falls in the Indian stock market history:
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