RBI keeps Key Interest Rates Unchanged - Cuts SLR by 50 bps

The Reserve Bank of India (RBI) on Tuesday did not change the key interest rates as speculated. But, the apex bank cut the  statutory liquidity ratio (SLR) by 50 basis points. RBI kept the benchmark repurchase rate at 7.75 per cent.

Looking at the macro-economic indicators, it has been speculated by all that the RBI would cut the key interest rates while reviewing its credit policy for the month of January. But, there was not rate cut announcement by the apex bank that led to tumble the stock markets in India.

BSE Sensex fell by around 171 points and the Nifty down by 45 points. Investors were anticipated a rate cut but that was not happened as expected. The Governor of RBI Raghu Rajan said inflation was likely to at around 6 per cent by the end of January 2016 but other factors - monsoon and oil price could be great factors.

Bank stocks fell heavily following the no rate cut by the RBI today at BSE Sensex and Nifty. 

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RBI may cut interest rates: Goldman Sachs

Goldman Sachs expects that Reserve Bank of India may cut the interest rate on Tuesday while reviews its policy, according to media reports.

The data over inflation for the November 2012 shows slide in the headline inflation.

It is believed that any cut in the interest rate would boost the stock markets in the India. The rate cuts would have positive impact on the liquidity in the country.

There has been also slow growth rate of GDP at 5.3 per cent in July- September. And the core inflation was at 4.5 per cent.

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Will the Loan Interest Rates Rise After Union Budget?

Business News This Week: Will the Loan Interest Rates Rise After Union Budget? The current fiscal is the best time for taking loans and purchasing vehicles if at all your planning for. Experts believe that the loan interest rates may go up as the RBI is scheduled to review its credit policy in April 10. The major objective of RBI would be to the cut the soaring food inflation and maintain the liquidity in the market.

According to some analysis the the cars loans and other loans would become dearer after the union budget 2010-11 and soon after the budget is presented the RBI will take care of the credit policies. RBI may bring some changes in the credit policy as per the requirement, which could have direct impact on the lending rates by the banks. Taking loans at floating would be disadvantages for the customers, while fixed rate is the best option for customers in regard to home loans.

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After CRR, will interest rates rise?

The Finance Minister P Chidambaram said he does not expect an increase in the lending rates any time soon.

Briefing reporter after a meeting with PSU ban heads, the finance minister has said bankers were happy that the RBI had changed the Cash Reserve Ratio (CRR) and left the policy rates untouched.

The finance minister said loan growth by banks is likely to be slightly higher than the projection of 20 per cent by the RBI.

The RBI took anti-inflationary measures to bring the inflation under control and there were expectation from the banker that in this process the RBI may change the interest rates.

In its annual policy, RBI has increased the Cash Reserve Ratio which would result to drain liquidity system by Rs. 9,000 cr.

The policy is clear – an inflation was defined by best economists as ‘too much of money chasing too few goods’.

The central bank has tried to check the credit flow through the Cash Reserve Ratio, as banks need to keep Cash Reserve Ratio  as per the RBI direction, which would help to check the credit flow in the nation. And ultimately, it may help to check the supply of money into the market.

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RBI announces Annual Policy Statement for the year 2008-09

The Governor of Reserve Bank of India Dr. Y. Venugopal Reddy has presented today the Annual Policy Statement for the year 2008-09 on April 29, 2009, according to the media reports. The RBI has taken measures to tackle the inflation in its annual policy. The RBI has raised the Cash Reserve Ratio (CRR) by 25 basis points and Scheduled banks required to maintain CRR of 8.25 per cent with effect from the fortnight beginning May 24, 2008. This measure aims to check the credit flow in the country. The central bank, however, kept the repo and reverse repo rates unchanged.

Some of the highlights of the Annual Policy Statement for 2008-09 are as follow:

• Bank Rate, Reverse Repo Rate and Repo Rate kept unchanged.
• Scheduled banks required to maintain CRR of 8.25 per cent with effect from the fortnight beginning May 24, 2008.
• GDP growth projection for 2008-09 in the range of 8.0- 8.5 per cent.
• Inflation to be brought down to around 5.5 per cent in 2008-09 with a preference for bringing it close to 5.0 per cent as soon as possible. Going forward, the resolve is to condition policy and perceptions for inflation in the range of 4.0-4.5 per cent so that an inflation rate of around 3.0 per cent becomes a medium-term objective.
• High priority to price stability, well-anchored inflation expectations and orderly conditions in financial markets while sustaining the growth momentum.
• Swift response on a continuous basis to evolving adverse international and domestic developments through both conventional and unconventional measures.
• Emphasis on credit quality and credit delivery while pursuing financial inclusion.
• Deposits projected to increase by around 17.0 per cent or Rs.5,50,000 crore during 2008-09.
• A clearing and settlement arrangement for OTC rupee derivatives proposed.
• Currency futures to be introduced in eligible exchanges in consultation with the SEBI; broad framework to be finalised by May 2008.
• Indian companies to be allowed to invest in overseas in energy and natural resources sectors.
• Reserve Bank of carry out supervisory review of banks' exposure to the commodity sector.

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