The Reserve Bank of India (RBI) may not go in for key policy rate cuts in its quarterly policy review slated for January 23, said a senior finance ministry official.
ICICI Bank Chairman K V Kamath on Thursday disagreed with the suggestion of SBI chief Pratip Chaudhuri that RBI should scrap CRR, saying it is part of the monetary policy and no issue can be made of it.
The central bank kept cash reserve ratio unchanged at 4 per cent.
The Reserve Bank will present the mid-quarter Monetary Policy Review on Tuesday.
Interest rates are not expected to go up immediately even as the Reserve Bank of India on Tuesday announced a fresh 25-basis-point hike in the cash reserve ratio (CRR), the amount of cash banks must keep with the central bank, in its Annual Policy Statement for 2008-09. The impact is, however, expected to be marginal as bankers talked about keeping lending rates stable for the time being due to sufficient liquidity in the system. The move will absorb around Rs 8,000 crore.
The Reserve Bank of India has kept all key interest rates unchanged in its mid-term credit policy review announced on Monday.
Liquidity in the banking system has slipped into a deficit for the first time in three weeks, prompting banks to borrow the largest quantum of funds from the Reserve Bank of India (RBI) in around a month and a half. The key catalyst for the sudden tightening in liquidity was due to outflows on account of advance tax payments, which occur towards the end of a quarter. Analysts also cited other factors such as a currency leakage and possible interventions by the RBI in the foreign exchange market, which contributed to the tighter liquidity conditions.
Snapping its six-day losing streak both benchmarks rallied over 1% after RBI kept key policy rates unchanged.
Banks to lower rates shortly; RBI cuts CRR by 25 bps and signals easier policy in October
Banks to lower rates shortly; RBI cuts CRR by 25 bps and signals easier policy in October
The Reserve Bank of India on Thursday hiked the cash reserve ratio (CRR), the amount of depositors' money that banks need to park with it, by half a per cent to tighten money supply, as part of concerted efforts with the government to ease inflation.The hike, which would take CRR to 8 per cent, will come into effect in two tranches of 0.25 per cent on April 26 and May 10.
Industry houses are emphatic with the RBI pruning repo rate and CRR by 0.25 per cent each after a long nine months in its third quarter monetary policy review.
Hailing Reserve Bank's decision to cut key rates, Plan panel on Tuesday said it would boost investments and hoped the measures will have significant effect on long term borrowing rates.
The RBI has changed the way it approached supervision in the past. Having seen a couple of collapses in the NBFC sector and the near-collapse of a few banks, it is focusing on regular drills to prevent a fire from breaking out, explains Tamal Bandyopadhyay.
While the rupee snapped a four-session downslide, it rupee could not cement intra-day gains as RBI kept short-term lending (repo) and cash reserve ratio unchanged, forex dealers said.
The Reserve Bank has kept the key policy rates unchanged in its Mid-Quarter Monetary Policy Review.
Of the 15 participants, 7 expect CRR cut, only one sees repo rate reduction.
They feel reducing policy rates will help to boost production and revive the economy.
High inflation continues to be an obstacle in lowering policy rates as of now.
SBI too rules out cut in base rate in short term, to launch concessional schemes.
The central bank held the cash reserve ratio at 4 per cent.
Chidambaram welcomes CRR cut as a good small step forward.
Some reactions to RBI's monetary policy announced on Monday.
Real estate developers said on Tuesday that RBI's decision to cut cash reserve ratio will help improve the liquidity position of various sectors, including realty, but felt that interest rates should be brought down to boost housing demand.
The Reserve Bank of India has been actively doing OMOs or buyback of government bonds to manage liquidity in the system over the last few months.
Days ahead of the annual monetary policy, trade bodies today urged the Reserve Bank not to hike its key-rates as they fear a further tightening could push lending rates up and thus hamper growth.
The Reserve bank of India has kept the repo rate and reverse repo rates unchanged in its mid-quarter review of monetary policy announced on Thursday.
Since the start of the year, the RBI has had to contend with rising inflation and increased liquidity in the financial system causing it to raise CRR and repo rate to reign in the excess money.
To ease liquidity situation, the Reserve Bank today slashed CRR -- the portion of deposits banks are required to keep with the central bank -- by 0.75 percentage points, a step that will infuse Rs 48,000 crore (Rs 480 billion) into the economy.
A massive liquidity outflow of over Rs 40,000 crore (Rs 400 billion) in the coming weeks is expected to pull back the overnight call rates from the near sub-zero levels to the central bank-desired 6-7.75 per cent range.
NBFCs seek level playing field with banks in terms of treatment of NPAs, TDS on deposits, removal of service tax on HP and lease transactions, refinance mechanism akin to NHB etc
The Reserve Bank has decided to keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of their net demand and time liabilities and keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.25 per cent.
'If it doesn't, it will continue with measures to infuse liquidity, signalling a new cycle,' predicts Tamal Bandyopadhyay.
Wholesale price-based inflation spiked to a record high of 15.08 per cent in April on rising prices across segments from food to commodities. The WPI-based inflation was 14.55 per cent in March and 10.74 per cent in April last year. "The high rate of inflation in April 2022 was primarily due to rise in prices of mineral oils, basic metals, crude petroleum & natural gas, food articles, non-food articles, food products and chemicals & chemical products etc. as compared to the corresponding month of the previous year," the commerce and industry ministry said in a statement.
If RBI slashes its borrowing rate, banks lend at a lower rate. Also, deposit rates go down.
Real estate companies' borrowing costs have moved up by a third in the last one and a half years, from 11.5-12 per cent to 16 per cent now.
