RBI nudges banks to cut rates (Business Standard 30th June 2008)
Banks are expected to review their deposit and lending rates in April on prodding by the Reserve Bank of India (RBI) even as the monetary policy on Tuesday kept key policy rates unchanged owing to continuing inflation concerns.
In its quarterly review of monetary policy, RBI said banks have enough room to lower deposit and lending rates, given the fact that their net interest margins (NIMs) are “very high”, even by international standards, and that they are flush with liquidity amid slowing credit demand.
Bankers took the cue and said there are sufficient indications in the policy that interest rates on both deposits and advances could be reviewed in the next quarter.
“There could be a realignment of interest rates within the existing structure. The entire system would take a view,” said M B N Rao, chairman of Canara Bank, India’s third largest bank by assets. More
Key rates unchanged; RBI focuses on inflation control (The Hindu Business Line 30th Jan 2008)The Reserve Bank of India left key rates unchanged in its monetary policy review announced on Tuesday, indicating that interest rates are unlikely to soften in the short term.
Ever since the US Fed cut rates by 75 basis points, there was a build-up of speculation on what the RBI would do. And the RBI chose to maintain status quo.
Responding to queries on why the RBI was not taking a cue from the US Fed, the Governor, Dr Y.V. Reddy, said that while it was a relevant input, domestic considerations dominated RBI’s policy. More
Bankers expect a drop in rates after a few monthsChennai(The Hindu Business Line 30th Jan 2008)Although the credit policy of the Reserve Bank of India, announced today, does not cue a rate cut, it appears to be a matter of consensus among bankers that interest rates will fall after a few months.
Most bankers that Business Line spoke to today said they expected a softening of both deposit and lending rates from the beginning of next financial year.
They all said that the ‘Third quarter review of Annual Statement on Monetary Policy for 2007-08’ was pretty much on expected lines – status quo was well flagged by the RBI Governor, Mr Y.V. Reddy, in his various speeches in the recent times. However, bankers read a message embedded in the policy statement: reduce interest rates. More
Banks unlikely to cut deposit, lending rates (Business Standard 30th June 2008) Interest rates on home loans are expected to remain stable despite Reserve Bank of India (RBI) sending clear signals to banks in its third quarter review of the annual policy statement to cut lending rates by rationalising deposit rates.The central bank has also expressed concern on banks not disbursing credit proportionately, and instead parking funds in government securities and other debt market instruments.Banks, however, seem to be in no hurry to reduce deposit and lending rates. Deposit rate is a sticky subject for public sector banks. Bank chiefs have submitted performance targets including that for business (advances plus deposits) at the beginning of the year (2007-08). These targets have not been revised. With credit offtake slowing down, the only way they can meet their business goal is by garnering deposits. Hence, a deposit rate cut by public sector banks seem unlikely."Ample liquidity in the system helped banks keep rates stable in the quarter of January-March. Rates peak during this period every year, but they are likely to remain stable now. We would let this quarter go by. We would have to analyse how liquidity in the system pans out following the tax outflows in March,'' said Chanda Kochhar, deputy managing director, ICICI Bank. More
I endorse RBI stance on rates: Chidambaram (Business Standard 30th June 2008) Finance Minister P Chidambaram today backed the "standstill" policy of Reserve Bank of India (RBI)."There is no change in bank rate, repo, reverse repo rate and the cash reserve ratio. That gives flexibility to the RBI Governor to move either way depending upon international and domestic developments. I can understand that, and I endorse the approach," Chidambaram told reporters today.On the possibility of increased capital inflows due to the rate cut by the US Federal Reserve, Chidambaram said: "We do not know what will happen. The cat can jump either way. There could be increased capital inflows, but there are payment obligations in those countries, there could be an outflow also. We have to wait and see."The government and RBI will work closely to respond to any emerging economic situation that may impact prices, Chidambaram emphasised. More
RBI expects inflation to be in 4-4.5% range in 2009(The Hindu Business Line 30th Jan 2008)The Reserve Bank of India expects inflation to remain between 4 and 4.5 per cent in the next fiscal. Despite global uncertainties, the RBI’s target for GDP growth remains on track at 8.5 per cent.
“In 2009, after recognising the possible uncertainties in the global situation we should aim for at least 8.5 growth, if not more. Inflation should go to 4-4.5 per cent in 2009. If we want global integration then 4 per cent is better and that is what we should have in 2009,” Dr Y.V. Reddy, Governor, RBI, told reporters at a press conference.
However, concerns about inflationary pressures persist. More
Banks are expected to review their deposit and lending rates in April on prodding by the Reserve Bank of India (RBI) even as the monetary policy on Tuesday kept key policy rates unchanged owing to continuing inflation concerns.
In its quarterly review of monetary policy, RBI said banks have enough room to lower deposit and lending rates, given the fact that their net interest margins (NIMs) are “very high”, even by international standards, and that they are flush with liquidity amid slowing credit demand.
Bankers took the cue and said there are sufficient indications in the policy that interest rates on both deposits and advances could be reviewed in the next quarter.
“There could be a realignment of interest rates within the existing structure. The entire system would take a view,” said M B N Rao, chairman of Canara Bank, India’s third largest bank by assets. More
Key rates unchanged; RBI focuses on inflation control (The Hindu Business Line 30th Jan 2008)The Reserve Bank of India left key rates unchanged in its monetary policy review announced on Tuesday, indicating that interest rates are unlikely to soften in the short term.
Ever since the US Fed cut rates by 75 basis points, there was a build-up of speculation on what the RBI would do. And the RBI chose to maintain status quo.
Responding to queries on why the RBI was not taking a cue from the US Fed, the Governor, Dr Y.V. Reddy, said that while it was a relevant input, domestic considerations dominated RBI’s policy. More
Bankers expect a drop in rates after a few monthsChennai(The Hindu Business Line 30th Jan 2008)Although the credit policy of the Reserve Bank of India, announced today, does not cue a rate cut, it appears to be a matter of consensus among bankers that interest rates will fall after a few months.
Most bankers that Business Line spoke to today said they expected a softening of both deposit and lending rates from the beginning of next financial year.
They all said that the ‘Third quarter review of Annual Statement on Monetary Policy for 2007-08’ was pretty much on expected lines – status quo was well flagged by the RBI Governor, Mr Y.V. Reddy, in his various speeches in the recent times. However, bankers read a message embedded in the policy statement: reduce interest rates. More
Banks unlikely to cut deposit, lending rates (Business Standard 30th June 2008) Interest rates on home loans are expected to remain stable despite Reserve Bank of India (RBI) sending clear signals to banks in its third quarter review of the annual policy statement to cut lending rates by rationalising deposit rates.The central bank has also expressed concern on banks not disbursing credit proportionately, and instead parking funds in government securities and other debt market instruments.Banks, however, seem to be in no hurry to reduce deposit and lending rates. Deposit rate is a sticky subject for public sector banks. Bank chiefs have submitted performance targets including that for business (advances plus deposits) at the beginning of the year (2007-08). These targets have not been revised. With credit offtake slowing down, the only way they can meet their business goal is by garnering deposits. Hence, a deposit rate cut by public sector banks seem unlikely."Ample liquidity in the system helped banks keep rates stable in the quarter of January-March. Rates peak during this period every year, but they are likely to remain stable now. We would let this quarter go by. We would have to analyse how liquidity in the system pans out following the tax outflows in March,'' said Chanda Kochhar, deputy managing director, ICICI Bank. More
I endorse RBI stance on rates: Chidambaram (Business Standard 30th June 2008) Finance Minister P Chidambaram today backed the "standstill" policy of Reserve Bank of India (RBI)."There is no change in bank rate, repo, reverse repo rate and the cash reserve ratio. That gives flexibility to the RBI Governor to move either way depending upon international and domestic developments. I can understand that, and I endorse the approach," Chidambaram told reporters today.On the possibility of increased capital inflows due to the rate cut by the US Federal Reserve, Chidambaram said: "We do not know what will happen. The cat can jump either way. There could be increased capital inflows, but there are payment obligations in those countries, there could be an outflow also. We have to wait and see."The government and RBI will work closely to respond to any emerging economic situation that may impact prices, Chidambaram emphasised. More
RBI expects inflation to be in 4-4.5% range in 2009(The Hindu Business Line 30th Jan 2008)The Reserve Bank of India expects inflation to remain between 4 and 4.5 per cent in the next fiscal. Despite global uncertainties, the RBI’s target for GDP growth remains on track at 8.5 per cent.
“In 2009, after recognising the possible uncertainties in the global situation we should aim for at least 8.5 growth, if not more. Inflation should go to 4-4.5 per cent in 2009. If we want global integration then 4 per cent is better and that is what we should have in 2009,” Dr Y.V. Reddy, Governor, RBI, told reporters at a press conference.
However, concerns about inflationary pressures persist. More
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