Bankers have been criticised for not passing the benefits of rate cuts
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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.
Reflecting nervousness over the prospect of the Federal Reserve tightening policy and event risk, traders stayed on the sidelines
The Reserve Bank of India on Friday decided to leave benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance as the economy faces heat of the second Covid wave.
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SBI Chairman in the last year's banking conclave had started a debate by seeking to abolish cash reserve ratio to enhance liquidity in the banking sector for more productive use.
'Banks are being encouraged to lend instead of parking their resources with the RBI and earn risk-free interest income,' points out Tamal Bandyopadhyay.
'Three external members of the first MPC are respected researchers with excellent academic background, but there is no harm in considering academicians with diverse backgrounds such as finance and labour along with economists for this body,' recommends Tamal Bandyopadhyay.
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Snapping a two-day fall, the rupee opened strong at 59.49 a dollar from the previous close of 59.76 at the Interbank Foreign Exchange Market and then touched a low of 59.59.
Gold prices are already moving fast to the key level of Rs 30,000 per 10 gms
As liquid tightening measures were likely to be temporary, any change in lending rates would depend on the length of these measures, according to bankers.
Banks and exporters preferred to reduce their dollar position in view of its weakness.
Any revision in loan rates would be visible next month.
CRR remains unchanged at 4%; first repo rate cut since May 2013.
The RBI needs to maintain a healthy contingency reserve so that it can lend its support in case of a bank failure.
Broking firm Jefferies says Indian financial system is now flooded with the kind of liquidity witnessed in 2005-07 and 2009-10
An action on the rate front is unlikely to figure in Rajan's plan for the moment.
Commercial papers, certificates of deposit also dry up
Markets shrugged off RBI's neutral stance on key policy rates.
Market breadth depicted gains with 1,476 advances over 1,403 declines on the BSE. 140 stocks remained unchanged.
YES Bank raises base rate; HDFC Bank, Axis hike deposit rates.
Over to the government how they manage the uncertainty of monsoon and revive spending in order to entice RBI for another round of rate cuts
A comprehensive technical framework needed, from which a more convincing policy could be demonstrated
With a sole mandate of inflation targeting, RBI wears many hats.
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