Borrowers wanting to prepay home loans can look forward to some relief as RBI on Tuesday indicated that it would scrap prepayment penalties charged by banks.
Banks have not raised interest rates following the September review of credit policy.
The transmission of the last cash reserve ratio cut has also not happened fully because that came in March.
Last month, RBI slashed cash reserve ratio -- the percentage of deposits that banks have to keep with the RBI -- from 5.5 per cent to 4.75 per cent. With this, the central bank had infused Rs 48,000 crore (Rs 480 billion) into the economy.
ED orders Chanda Kochhar to appear with asset lists also provide income-tax returns in her individual capacity and of companies if she was a director or held any position.
In addition to concerns over monsoon shortfall and rising global commodity prices, RBI on Monday said that a hike in power tariffs could further push up inflation in the coming months.
RBI in its mid-year review of the monetary policy is expected to raise its key interest rate by 25 basis point to contain inflation which is hovering near the double-digit mark.
The global economy weakened in the second quarter of 2011, as growth moderated in both advanced and emerging market economies under the impact of high oil and other commodity prices.
With inflation hovering much above the comfort zone, the Reserve Bank of India may raise key policy rates by 25 basis points in its first mid-quarterly review of the credit policy for financial year 2012 on Thursday.
Gross Domestic Product expanded by 8.5 per cent in 2010-11.
The International Monetary Fund and the World Bank had forecast that India's economy would grow at 8 per cent and 9 per cent, respectively.
Ahead of its annual credit policy, the RBI also said the government's inability to raise oil prices in line with increase in the international prices poses a 'significant medium-term risk' to the economy.
RBI Governor D Subbarao is expected in the capital on Friday to hold pre-policy consultations with Finance Ministry officials.
The central bank is slated to review its credit policy on January 25.
The central bank is conducting a series of these meetings with individual banks as it prepares to announce the annual monetary and credit policy for the financial year 2011-12 on May 3.
BSE market breadth was negative. Out of 2,954 stocks traded, 1,641 stocks declined while 1,200 stocks advanced.
State-run Central Bank of India on Thursday said Reserve Bank of India's credit policy initiative has increased pressure on interest rates.
MFIs were allegedly charging interest rates of over 30 per cent.
Nifty ended at 5,447 -- down 65 points.
If RBI slashes its borrowing rate, banks lend at a lower rate. Also, deposit rates go down.
Central banks should be free to decide on monetary and credit policy.
As the first quarter review of the credit policy approaches, voices from the market are getting louder by the day that 'baby steps' may not be sufficient to fight rising prices.
The Sensex closed at 20,032, up 91 points, the Nifty closed up 30 points at 6018.
Savings rate and returns from debt funds will be nullified by high borrowing rates.
The finance ministry has voiced the opinion that there was no need for the RBI to increase the key rates that could impact the banks lending rates.
The Reserve Bank of India is likely to announce a "gradual" exit from its easy money stance and may resort to raising key rates to squeeze out excess liquidity from markets in its forthcoming review meeting, investment banking firm Barclays Capital says.
The Commerce Ministry wants the Reserve Bank to reduce interest rate for dollar credit in its forthcoming monetary policy to help sustain the fledgling recovery in the exports sector.
The Reserve Bank of India will announce the third quarter review of its Monetary and Credit Policy on January 29.
The RBI, however, kept other key rates and ratios like repo, reverse repo and cash reserve ratio unchanged.
Monetary policies worldwide has to deal with issues like controlling inflation, promoting growth and financial stability.
Amid expectations that the Reserve Bank may keep its monetary stance unchanged, the central bank will come out with its second quarter review of the credit policy for the current fiscal on October 27.
Ahead of the first quarterly review of credit policy on Tuesday, RBI Governor D Subbarao on Friday met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee to review the macro economic situation.
The NSE Nifty settled at 4,847, down 124 points. The market breadth was extremely negative. Out of 2,789 shares traded, 2,274 declined and 449 advanced on the BSE on Tuesday.
The economists, polled by industry body Federation of Indian Chambers of Commerce and Industry, said the RBI may raise the cash reserve ratio, which is a portion of deposits that banks keep in cash with the central bank, by 50 basis points to 5.5 per cent, although this would have no impact on containing inflation.
The NSE Nifty ended with a point lower at 5,236. The market breadth was positive - out of 2,971 stocks traded, 1,614 advanced, 1,238 declined on the BSE on Monday.
The fear of deepening recession has faded, and the outlook for the global economy as well as for India has turned positive. Not that this means that the economy is out of the wood yet by any means. But the objective of the central bank should be to act in a manner consistent with conditions a couple of quarters ahead.
Reserve Bank Governor D Subbaro on Tuesday said there is scope for banks to lower lending rates further, but most top bankers maintained that interest rates will remain the same in the near term and could even rise after 3-4 months.
The forecast is part of the macro-economic report by the RBI, which said signs of revival in the global financial conditions seen in Q1 of FY'10 are necessary, but were not sufficient to induce a firm global recovery. The central bank estimates comes a day ahead of the quarterly review of credit policy.
Inflation rose to (-)1.17 per cent for the week ended July 11 compared to (-)1.21 per cent in the previous week as food articles like pulses, cereals, fruits and vegetables turned expensive.
Bank chiefs told the RBI said they needed to mobilise deposits as they were facing additional demand for funds with other sources drying up. "When government schemes are offering 8 per cent rate, banks cannot go below that. If we cut rates further, we will not be able to attract fresh funds and will also face the prospects of depositors exiting in favour of small savings instruments," said a banker who attended the meeting.
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