The NSE Nifty slumped to a low of 4,833, and finally settled with a heavy loss of 155 points at 4,853. The index has shed 422 points (8%) in the last six day. The market breadth too was extremely bearish, with nearly eight stocks for each advancing stock. Out of 2,944 stocks traded, 2,582 declined and 337 advanced on Wednesday.
CRR stand at 5.5 per cent after a 50 basis points cut in January.
Reserve Bank of India (RBI) Governor Sanjay Malhotra said the repo rate cut in the February meeting of the monetary policy committee (MPC) was due to inflation aligning with the target and recognising the fact that monetary policy is forward-looking.
The transmission of the last cash reserve ratio cut has also not happened fully because that came in March.
Talks of a merger between HDFC Bank and parent HDFC Ltd had gained steam nearly eight years ago, when the Reserve Bank of India allowed banks to issue long-term bonds to fund infrastructure and affordable housing. At that time, key executives at both entities denied any such proposal. And today, the merger has been officially announced by the two players.
Leading industry and export chambers like PHDCCI and Federation of Indian Export Organisation on Tuesday demanded 1.0 per cent cut in bank rate and cheaper export finance in Reserve Bank of India's' forthcoming busy season credit policy.
RBI had last week announced a 0.5 per cent increase in cash reserve ratio to 5.5 per cent in two phases to absorb excess liquidity from the economy and check rising prices.
The banking system neared Rs 1.47 trillion of liquidity deficit on Monday, the highest since January 29, 2020, when the banking system liquidity deficit went up to Rs 3 trillion. The Reserve Bank of India (RBI) injected Rs 1.47 trillion on Monday and Rs 1.46 trillion on Tuesday. Market participants say that the disbursement of Rs 25,000 crore as the second tranche of incremental cash reserve ratio (I-CRR) will not be enough, and the liquidity might tighten further to Rs 2 trillion in short term due to tax outflows and arrival of the festival season.
The goverment has found serious irregularities in the functioning of the National Bank for Agriculture and Rural Development (Nabard), Finance Minister Jaswant Singh said in the Rajya Sabha Tuesday.
A CRR cut will help banks to reduce lending rates.
The Reserve bank of India has just increased its repo rate and CRR and there are chances that banks may soon increase the interest rates on home loans.
Our financial system, by any reckoning, is fragile, which is why the RBI is intervening.
The main culprit is the lack of transparency that your lending bank of housing finance institute employs in determining home loan rates.
The rate cuts are expected to infuse Rs 80,000 crore into the banking system.
The recent hike in the rates will hurt your finances further. Time to do some stock-taking.
According to Corporation Bank executive director Asit Pal, there would not be any change in prime lending rate as there is sufficient liquidity in the system and credit offtake is also muted at this point of time.
Inflation is likely to peak at 8.7 per cent by end-March and the Reserve Bank is likely to begin tightening its monetary policy from its January policy review itself, a report by Bank of America Merrill Lynch (BofAML) has said.
The central bank may hike CRR by 50 bps; some economists expect a rise in policy rates too.
A day after the Reserve Bank of India (RBI) raised the benchmark repo rate and cash reserve ratio (CRR), leading property developers said they are mulling hiking prices of apartments and focusing on the affordable housing segment to counter the impact of a high interest rate regime.
Referring to the proposed new monetary policy framework, it said in the weeks ahead, government and RBI will work towards it.
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.
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.
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.
Demonetisation of the high value currency notes of Rs 500 and Rs 1,000 did not have any discernible impact on currency in circulation (CIC) in the country, which has soared by almost 83 per cent since its announcement on November 8, 2016. The Supreme Court on Monday upheld the decision of the government on demonetisation. On November 8, 2016 Prime Minister Narendra Modi had announced demonetisation of old Rs 1,000 and Rs 500 banknotes and one of the key objectives of the unprecedented decision was to promote digital payments and curb black money flows.
Battling a sharp surge in inflation, the Reserve Bank is all for a smooth monetary policy response and the desire to have smaller hikes led it to tighten the policy in an off-schedule meet, a source said on Thursday. Inflation has been massively impacted by Russia's invasion of Ukraine and will in due course also reflect the dent caused by Indonesia banning palm oil exports, the source aware of central bank thinking said, indicating that there was no other option but to respond. "The idea is to have a smooth policy response, not to put in large cold turkey responses," the source said, making it clear that the preference is for smaller magnitude responses and not larger ones.
RBI's exercise will take into account standards of governance, the viability of the payment bank (PB) business model, and changes, if any, if needed.
The chances of a rate cut in September have risen.
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.
The following are the highlights of the mid-term review of Monetary and Credit Policy for the year 2003-04.
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's (RBI's) decision to withdraw the incremental cash reserve ratio (I-CRR) is expected to benefit banks during the festival season. They are likely to increase deposit rates by up to 25 basis points (bps) in select maturity buckets. The rise in demand for funds to cover tax payments and meet quarter-end business targets could influence rate decisions by banks, according to bankers and money market executives.
BofA-ML said the liquidity deficit is running higher than the forecasts because the RBI has suspended its bond buybacks or open market operations.
From the Sensex pack, IndusInd Bank, NTPC, Asian Paints, Hindustan Unilever, JSW Steel, Tech Mahindra, Bajaj Finance, Infosys, Wipro, ICICI Bank, Bajaj Finserv, HDFC Bank and Tata Motors were among the major laggards. HCL Technologies, Power Grid, Titan, Reliance Industries, UltraTech Cement, Tata Steel, State Bank of India and Mahindra & Mahindra were the gainers.
The gains will be gradual as the measure will be executed over 12 months or so.
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Steps announced by new RBI Governor Raghuram Rajan could attract $10 billion of forex inflows in the next three months and this could be a material near-term positive for the rupee, which has lost 20 per cent since January, the London-based banking and financial services company said.
If India sustains long-term growth, you could make good money off the stock market.
Amid liquidity tightness in the banking system, certificate of deposit (CD) rates topped 8 per cent for some smaller banks, with rates remaining on the higher side for derivatives loss-hit IndusInd Bank. On Thursday, CSB Bank raised Rs 100 crore via one-year CDs at 8.5 per cent, while Utkarsh Small Finance Bank issued three-month CDs at 8.05 per cent to raise Rs 50 crore.
Ahead of its annual monetary policy scheduled next month, the RBI in a sudden move hiked the repo rate and Cash Reserve Ratio** to 7.75 per cent and 6.5 per cent, respectively to suck out about Rs 19,500 crore (Rs 195 billion0 from the system.
