India's fiscal deficit is expected to be 5.6 per cent of gross domestic product this fiscal as against the budget estimates of 4.6 per cent of GDP.
In view of rising deposit rates after the Reserve Bank of India announced a hike in repo rate*, bankers fear a pressure on lending rates, including in farm sector.
The central bank cut SLR to 23 per cent from 24 per cent.
More steps are necessary to accelerate speed.
The finance ministry wants the Reserve Bank of India (RBI) to switch its policy stance, with growth concerns occupying centre stage and inflation showing signs of moderating.
Consequently, the reverse repo rate under the LAF will remain unchanged at 7.5 per cent and the marginal standing facility (MSF) rate at 9.5 per cent.
Policy rates are not likely to increase in 2008 but a cut in repo rate too is uncertain.
The crowd at the Confederation of Indian Industry's annual general meeting and national conference 2012 merely issued a round of half-hearted applause, though finance minister Pranab Mukherjee had earlier hinted a rate cut was in the offing in the next 'half an hour'.
The government is set to ask PSBs to expeditiously introduce repo-rate linked products "to step up affordable credit".
The industry urged the central bank to consider a rate even before the next monetary policy review on July 30.
Nearly all the 43 economists surveyed over the past week expect the RBI to leave its key repo rate on hold at 8 per cent.
Reserve Bank Governor Raghuram Rajan on Tuesday again surprised the markets and raised the key policy rate by 0.25 per cent to 8 per cent in a bid to curb inflation, a move that may translate into higher EMIs and push up the cost of borrowing for corporates.
In the last policy review in December, RBI had decided to keep policy rate unchanged.
Financial services firm AnandRathi analysed the key points of the policy soon after it was announced.
The Reserve Bank of India (RBI) lowered its policy repo rate by 25 basis points to 7.5 percent on Wednesday.
Be prepared to pay more every month on your home, auto and other loans.
Lending rates have to be sensitive to the policy rate, says RBI.
'Consider 40% to 50% in equities, 10% in gold as a hedge, and the remaining 30% to 40% split between multi-asset funds and hybrid funds.'
Select the exact category by matching your investment horizon to the portfolio duration, suggests Sanjay Kumar Singh.
Falling growth, inflation and lower fiscal deficit are expected to prompt RBI to cut rates.
Over the last week, several banks have cut rates by 25 basis points, clearly not enough to fuel credit demand.
He said despite liquidity injection by RBI, borrowers should not expect reduction in interest rates for short- and medium-term loans. He, however, added that the measures announced by the government and RBI have starting yielding results.
RBI had previously cut repo rate by 0.25% each in January and March.
The recent hike in the rates will hurt your finances further. Time to do some stock-taking.
DLF, Indiabulls Real Estate, HDIL, YES Bank, Union Bank of India and Maruti Suzuki are down 4-12% on NSE.
Reserve Bank Governor D Subbarao will, however, not touch the policy rate or the repo, rate at which RBI lends to banks, on October 30 when he unveils the half-yearly monetary policy because headline inflation continues to be elevated at 7-7.5 per cent, the agency said.
Finance Minister expects rate cut by RBI.
Key lending rate (repo) raised by 50 basis points to 4.9 per cent; 2nd increase in 5 weeks
"He (RBI governor Duvvuri Subbarao) has explained the position. I think the governor's statement is very balanced, very appropriate as far as I could understand," Reddy said.
In its quarterly macroeconomic review on Monday, the central bank said it expects inflation to remain near current elevated levels for the remainder of the fiscal year that ends in March.
The Reserve Bank on Friday took steps towards normalisation of liquidity management to pre-pandemic levels, with the introduction of the standing deposit facility (SDF) as the basic tool to absorb excess liquidity, and narrowing the liquidity adjustment facility (LAF) to 0.50 per cent from the 0.90 per cent. Governor Shaktikanta Das said the SDF will be at 3.75 per cent, 0.25 per cent below the repo rate and 0.50 per cent lower than the marginal standing facility (MSF) which helps the banks with funds when required. The SDF has its origins in a 2018 amendment to the RBI Act and is an additional tool for absorbing liquidity without any collateral.
In a move that may set the tone for other players, State Bank of India, the country's largest lender, has decided against raising interest rates for the time being. The decision was taken at a meeting of the assets-liability committee on Saturday.
© 2026 Rediff.com - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances