Showing posts with label RBI. Show all posts
Showing posts with label RBI. Show all posts
The Reserve Bank of India,RBI, has released the Mid-Quarter Review of Monetary Policy 2012-13.
Much to the relief of bankers, the RBI has reduced the Cash Reserve Ratio - CRR by 25 basis points from 4.75 per cent to 4.50 per cent. CRR is the amount of money that banks have to keep with RBI.
The RBI has said this cut in CRR will bring in additional liquidity of 170 billion in the banking system. CRR cut would be effective from September 22. RBI has kept all the other key policy rates unchanged.
The policy repo rate under the Liquidity Adjustment Facility - LAF remains at 8 per cent. Consequently, the reverse repo rate will remain unchanged at 7.0 per cent.
Repo rate is the rate at which RBI lends money to banks while the Reverse Repo rate is the rate at which RBI borrows money from banks. The Marginal Standing Facility - MSF rate and the Bank Rate remains at 9.0 per cent.
Lauding the government’s economic reforms, RBI has said that Government has undertaken long anticipated measures towards fiscal consolidation which should contribute to both greater capital inflows and in the long run towards higher productivity, particularly in the food supply chain.
It adds that although domestic growth continues to be weak amidst a negative investment climate; the recent reform measures have started to reverse sentiments.
But maintaining that inflationary pressures, both at wholesale and retail levels, are still strong and persistent; RBI has said that the primary focus of monetary policy remains the containment of inflation and anchoringरोकना शरणस्थान of inflation expectations.
RBI adds that while the recent upward revision in diesel prices and rationalisation of subsidy for LPG is a significant achievement, in the short-term, it will lead to pressure on headline inflation.
Over the medium-term, however, it will strengthen macro-economic fundamentals. RBI has assured that as government action begins to stimulate growth, monetary policy will reinforce the positive impact of these actions while maintaining its focus on inflation management.
RBI has said that economic growth has remained sluggish while money supply, bank credit and deposits have moderated. On the rainfall front, RBI has said late rains have augmented storage in reservoirs which should improve prospects for the rabi crop, mitigating to some extent the concerns about agricultural prospects.
Kharif sowing however is still below normal. RBI has further said that global economic situation is also not good; exerting pressure on global asset prices, and particularly, commodity prices.
Meanwhile, cheering the government’s reform move, the Bombay Stock Exchange has recorded a jump of more than 1 percent in the opening trade.
State Bank of India - SBI Chairman Pratip Chaudhuri has welcomed the policy decisions saying that RBI has given a clear signal that they are willing to respond and that they have taken note of the signs of deceleration in economy.
Much to the relief of bankers, the RBI has reduced the Cash Reserve Ratio - CRR by 25 basis points from 4.75 per cent to 4.50 per cent. CRR is the amount of money that banks have to keep with RBI.
The RBI has said this cut in CRR will bring in additional liquidity of 170 billion in the banking system. CRR cut would be effective from September 22. RBI has kept all the other key policy rates unchanged.
The policy repo rate under the Liquidity Adjustment Facility - LAF remains at 8 per cent. Consequently, the reverse repo rate will remain unchanged at 7.0 per cent.
Repo rate is the rate at which RBI lends money to banks while the Reverse Repo rate is the rate at which RBI borrows money from banks. The Marginal Standing Facility - MSF rate and the Bank Rate remains at 9.0 per cent.
Lauding the government’s economic reforms, RBI has said that Government has undertaken long anticipated measures towards fiscal consolidation which should contribute to both greater capital inflows and in the long run towards higher productivity, particularly in the food supply chain.
It adds that although domestic growth continues to be weak amidst a negative investment climate; the recent reform measures have started to reverse sentiments.
But maintaining that inflationary pressures, both at wholesale and retail levels, are still strong and persistent; RBI has said that the primary focus of monetary policy remains the containment of inflation and anchoringरोकना शरणस्थान of inflation expectations.
RBI adds that while the recent upward revision in diesel prices and rationalisation of subsidy for LPG is a significant achievement, in the short-term, it will lead to pressure on headline inflation.
Over the medium-term, however, it will strengthen macro-economic fundamentals. RBI has assured that as government action begins to stimulate growth, monetary policy will reinforce the positive impact of these actions while maintaining its focus on inflation management.
RBI has said that economic growth has remained sluggish while money supply, bank credit and deposits have moderated. On the rainfall front, RBI has said late rains have augmented storage in reservoirs which should improve prospects for the rabi crop, mitigating to some extent the concerns about agricultural prospects.
Kharif sowing however is still below normal. RBI has further said that global economic situation is also not good; exerting pressure on global asset prices, and particularly, commodity prices.
Meanwhile, cheering the government’s reform move, the Bombay Stock Exchange has recorded a jump of more than 1 percent in the opening trade.
State Bank of India - SBI Chairman Pratip Chaudhuri has welcomed the policy decisions saying that RBI has given a clear signal that they are willing to respond and that they have taken note of the signs of deceleration in economy.
Labels: mid quarter review, RBI
Reserve Bank of India, RBI today said, the liquidity situation currently is comfortable and indicated that monetary policy action in the forthcoming mid-quarterly review next week, would depend on latest developments in the money market. RBI Deputy Governor Subir Gokarn told reporters on the sidelines of a function in Mumbai that the Central bank would take note of emergence of signs of stress in the market but there are no such signs at the moment.
The RBI, in its mid-quarterly review of monetary policy to be announced on September 17, is expected to take steps to promote growth and also contain inflationary expectations. The RBI is also expected to respond to some bankers' demand for abolition of Cash Reserve Ratio.
The RBI, in its mid-quarterly review of monetary policy to be announced on September 17, is expected to take steps to promote growth and also contain inflationary expectations. The RBI is also expected to respond to some bankers' demand for abolition of Cash Reserve Ratio.
Labels: RBI
Reserve Bank of India Governor D Subbarao has said the battle against inflation has not ended yet and high prices were mostly hurting the poor people, who do not have a mechanism to get their voice heard.
He said, while delivering a lecture at Cornell University in New York that the inflation continues to remain high and needs to be brought down to more acceptable levels of five per cent or less.
Mr Subbarao has maintained that the issue of inflation needs to remain the top priority for the Reserve Bank of India.
He said, while delivering a lecture at Cornell University in New York that the inflation continues to remain high and needs to be brought down to more acceptable levels of five per cent or less.
Mr Subbarao has maintained that the issue of inflation needs to remain the top priority for the Reserve Bank of India.
India and Pakistan have agreed to allow two banks each from both the countries to set up branches across the border.
Governor of the State Bank of Pakistan, Yaseen Anwar told PTI in Singapore that discussions were held with the Reserve Bank of India and both sides have agreed to issue a full banking licence to two banks of each country.
The two Indian banks that will be allowed to operate in Pakistan are State Bank of India (SBI) and Bank of India (BoI).
On the other hand, quasi-state owned National Bank of Pakistan and privately-owned United Bank Ltd. will be running full-banking operations across the border, once licensed by India.
Governor of the State Bank of Pakistan, Yaseen Anwar told PTI in Singapore that discussions were held with the Reserve Bank of India and both sides have agreed to issue a full banking licence to two banks of each country.
The two Indian banks that will be allowed to operate in Pakistan are State Bank of India (SBI) and Bank of India (BoI).
On the other hand, quasi-state owned National Bank of Pakistan and privately-owned United Bank Ltd. will be running full-banking operations across the border, once licensed by India.
RBI today released its annual report for 2011-12 fiscal that ended on June 30. Attributing economic slowdown to a combination of domestic and global factors, the report says that the investment climate has worsened due to structural impediments, policy uncertainties, inflation persistence and rising interest rates.
To reverse the trend, RBI has asked the government to fast-track infrastructure projects and speed up regulatory clearances that will help to boost investments. RBI has said that investment climate in power sector has been affected by State Electricity Board losses and coal supply shortages. It advises the government to resolve all pending issues in respect of proposed new Fuel Supply agreements and resolve coal block auction without any further delay.
In the report RBI has said in order to step up public capital expenditures, the government needs to cut expenditure on subsidies. It adds that with limited fiscal and monetary space available to provide a direct stimulus, an expenditure-switching policy is needed.
RBI has said that financial inclusion is a substantially unfinished agenda and efforts need to be upscaled to reach out with a human face. RBI has also advised corporates to maintain integrity and be more competitive.
Defending its tight monetary policy stance, RBI said that although it has contributed to growth deceleration but was essential to maintain price stability and to lower inflation.
To reverse the trend, RBI has asked the government to fast-track infrastructure projects and speed up regulatory clearances that will help to boost investments. RBI has said that investment climate in power sector has been affected by State Electricity Board losses and coal supply shortages. It advises the government to resolve all pending issues in respect of proposed new Fuel Supply agreements and resolve coal block auction without any further delay.
In the report RBI has said in order to step up public capital expenditures, the government needs to cut expenditure on subsidies. It adds that with limited fiscal and monetary space available to provide a direct stimulus, an expenditure-switching policy is needed.
RBI has said that financial inclusion is a substantially unfinished agenda and efforts need to be upscaled to reach out with a human face. RBI has also advised corporates to maintain integrity and be more competitive.
Defending its tight monetary policy stance, RBI said that although it has contributed to growth deceleration but was essential to maintain price stability and to lower inflation.
hakrabarty was appointed as RBI’s Deputy Governor in 2009 for a period of three years. He handles departments like customer services, administration and personnel management, rural planning and credit and urban banks.
Labels: RBI
The Reserve Bank today said banks were resilient enough to weather the pressure on farm loans caused by drought like situation because of deficient monsoon.
RBI Deputy Governor KC Chakrabarty told reporters in New Delhi that banks have sufficient rehabilitation measures to weather it out. He said the Indian banking system would be able to face the stress.
Finance Minister P Chidambaram had said the Government would converge the Mahatma Gandhi National Rural Employment
Guarantee Act and other schemes to meet the challenges of drought-like situation in several states and enhance imports of commodities in short-supply to control price rise.
He said the contingency plans were in place to help farmers replant alternate crops as well as supply drinking water and fodder.
Monsoon is the life-line of the agriculture sector as only 40 per cent of the cultivable area is irrigated. Rain has been 20 per cent lower during June-July, affecting kharif crops mainly coarse cereals and pulses.
Karnataka, Gujarat, Maharashtra and Rajasthan are facing drought-like situation.
Last week, Empowered Group of Ministers (EGoM) on drought had approved diesel subsidy of 50 per cent to farmers for saving standing crops, and a 2,000 crore rupee package for states affected by drought-like situation.
RBI Deputy Governor KC Chakrabarty told reporters in New Delhi that banks have sufficient rehabilitation measures to weather it out. He said the Indian banking system would be able to face the stress.
Finance Minister P Chidambaram had said the Government would converge the Mahatma Gandhi National Rural Employment
Guarantee Act and other schemes to meet the challenges of drought-like situation in several states and enhance imports of commodities in short-supply to control price rise.
He said the contingency plans were in place to help farmers replant alternate crops as well as supply drinking water and fodder.
Monsoon is the life-line of the agriculture sector as only 40 per cent of the cultivable area is irrigated. Rain has been 20 per cent lower during June-July, affecting kharif crops mainly coarse cereals and pulses.
Karnataka, Gujarat, Maharashtra and Rajasthan are facing drought-like situation.
Last week, Empowered Group of Ministers (EGoM) on drought had approved diesel subsidy of 50 per cent to farmers for saving standing crops, and a 2,000 crore rupee package for states affected by drought-like situation.
Reserve Bank Governor D Subbarao today proposed a producers price index saying that the present structure of measuring inflation does not capture the price
movement of services and is a hybrid of rate quotes. He said, the Producer Price Index (PPI) will be better able to measure the average change over time in the sale prices of domestic goods and services.
Addressing a function in Mumbai, Mr.Subbarao said, sellers' and purchasers' prices differ due to government subsidies, sales and excise taxes, and distribution costs.
The RBI Governor further said that core inflation gives a better picture of price trend as it is less volatile WPI-based inflation.
Core inflation is usually estimated by excluding food and energy prices from the basket of goods and services that represents a household's spending.
movement of services and is a hybrid of rate quotes. He said, the Producer Price Index (PPI) will be better able to measure the average change over time in the sale prices of domestic goods and services.
Addressing a function in Mumbai, Mr.Subbarao said, sellers' and purchasers' prices differ due to government subsidies, sales and excise taxes, and distribution costs.
The RBI Governor further said that core inflation gives a better picture of price trend as it is less volatile WPI-based inflation.
Core inflation is usually estimated by excluding food and energy prices from the basket of goods and services that represents a household's spending.
Labels: Producer Price Index (PPI), RBI
The Reserve Bank of India has rationalized charges that banks can levy on customers for transfer of funds through National Electronic Funds Transfer - NEFT. In a notification issued in Mumbai, the RBI said as per the new rate system, banks can levy not more than 2 rupees 50 paise for funds transfer upto 10,000 rupees. Charges for transfers beyond this limit would remain unchanged at 5 rupees for transfers between 10,001 to one lakh Rupees; 15 rupees for transfers between one lakh to 2 lakh rupees and 25 rupees for transfers beyond 2 lakh. The new rates would become effective from 1st of next month.
In an initiative to spread awareness among public about counterfeit notes, the Reserve Bank of India has launched a website explaining ways to detect fake and counterfeit notes.
The website www.paisaboltahai.rbi.org.in provides a visual presentation on ways to identify counterfeit notes of 10, 20, 50, 100, 500 and 1000 rupee denominations. Website visitors also have an option to download posters of these currency notes, which can be used to identify counterfeit notes.
RBI has also made a downloadable documentary film available on the website on ways to identify counterfeit notes.
Labels: fake currency, RBI
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The Reserve Bank has extended the 2 per cent interest subsidy scheme by another year on rupee export credit to the labour-oriented and small scale sectors. The RBI, in its circular, said that exporters of handicrafts, handlooms, readymade garments, processed agriculture products and carpets will be eligible for interest subvention to be available up to the 31st of March next year. It will be effective from the 1st of April this year. Besides, sports goods and toys exporters would also be eligible for such benefit.
Labels: Interst rate, RBI
In an unexpected move and in a bid to tame the inflation, the Reserve Bank of India (RBI) has decided to keep all the key rates unchanged in its mid-quarter policy review on Monday.
The cash reserve ratio (CRR) has been kept unchanged at 4.75 per cent while the policy repo rate has been retained at 8 per cent.
Consequently, the reverse repo rate will remain unchanged at 7 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9 per cent.
In its statement, the Reserve Bank said that it had frontloaded the policy rate reduction in April with a cut of 50 basis points.
However, it said that further reduction in the policy interest rate at this juncture, rather than supporting growth, could worsen inflationary pressures.
The RBI said that the euro area sovereign debt problem has continued to weigh on the global recovery. It added that while slowing global growth has dampened commodity prices, heightened risk aversion and the resultant slowing of capital flows will have a significant adverse impact on emerging and developing economies (EDEs), including India.
India's economic growth skidded to 5.3% in the March quarter, its weakest in nine years. RBI said that deceleration in industrial production from the supply side and weak investment from the demand side have, in particular, contributed to the growth slowdown. The WPI rate of inflation rose to 7.6% in May as against 7.2% in April, 2012.
Primary food articles inflation rose from -0.7 per cent in January to 10.7 per cent in May largely due to a sharp increase in vegetable prices.
The Central bank said that the performance of the south-west monsoon will also play a role in determining inflationary conditions over the course of the current year.
In order to help export sector, RBI has raised limit of export credit refinance from 15 per cent of outstanding export credit of banks, to 50 per cent.
According to the Central Bank, this will further augment liquidity and encourage banks to increase credit flow to the export sector.
The decision will potentially release additional liquidity of over 30,000 crore rupees, equivalent to about 0.5 per cent of reduction in the CRR.
The RBI said that management of liquidity remains a priority. It added that the evolving growth-inflation dynamic will continue to influence the Reserve Bank's stance on interest rates.
The Central bank said that core inflation has moderated, reflecting demand conditions and lower pricing power. However, both headline and retail inflation rates are rising, which have a bearing on inflation expectations.
RBI said that future actions will depend on a continuing assessment of external and domestic developments that contribute to lowering inflation risks.
The cash reserve ratio (CRR) has been kept unchanged at 4.75 per cent while the policy repo rate has been retained at 8 per cent.
Consequently, the reverse repo rate will remain unchanged at 7 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9 per cent.
In its statement, the Reserve Bank said that it had frontloaded the policy rate reduction in April with a cut of 50 basis points.
However, it said that further reduction in the policy interest rate at this juncture, rather than supporting growth, could worsen inflationary pressures.
The RBI said that the euro area sovereign debt problem has continued to weigh on the global recovery. It added that while slowing global growth has dampened commodity prices, heightened risk aversion and the resultant slowing of capital flows will have a significant adverse impact on emerging and developing economies (EDEs), including India.
India's economic growth skidded to 5.3% in the March quarter, its weakest in nine years. RBI said that deceleration in industrial production from the supply side and weak investment from the demand side have, in particular, contributed to the growth slowdown. The WPI rate of inflation rose to 7.6% in May as against 7.2% in April, 2012.
Primary food articles inflation rose from -0.7 per cent in January to 10.7 per cent in May largely due to a sharp increase in vegetable prices.
The Central bank said that the performance of the south-west monsoon will also play a role in determining inflationary conditions over the course of the current year.
In order to help export sector, RBI has raised limit of export credit refinance from 15 per cent of outstanding export credit of banks, to 50 per cent.
According to the Central Bank, this will further augment liquidity and encourage banks to increase credit flow to the export sector.
The decision will potentially release additional liquidity of over 30,000 crore rupees, equivalent to about 0.5 per cent of reduction in the CRR.
The RBI said that management of liquidity remains a priority. It added that the evolving growth-inflation dynamic will continue to influence the Reserve Bank's stance on interest rates.
The Central bank said that core inflation has moderated, reflecting demand conditions and lower pricing power. However, both headline and retail inflation rates are rising, which have a bearing on inflation expectations.
RBI said that future actions will depend on a continuing assessment of external and domestic developments that contribute to lowering inflation risks.
Labels: RBI
Finance Minister Pranab Mukherjee says, the government is not sitting idle on reforms and indicated a cut in interest rates by the RBI, in its review of Monitory policy tomorrow, to arrest the slowdown in Economic growth.
Addressing an Assocham conference in Mumbai yesterday, Mr Mukherjee said, the government is taking steps to address concerns expressed by global agencies like Standard & Poor's and the industry.
Indicating that the RBI too will be joining the government in dealing with the slowdown, he said he is confident that keeping in view all the factors, the RBI will adjust the monetary policy as the government is adjusting fiscal policy.
Mr Mukherjee listed the growing burden of petroleum subsidy as one of the difficult areas before the Centre for which he appealed to the states to reduce their taxes. He said he has written to the states that the Centre will also respond but it has to be balanced because if federal finance becomes weak, nobody will be able to bailout the Indian economy.
The Reserve Bank of India (RBI) has directed state and central co-operative banks to stop levying penalty on pre-payment of home loans on floating interest rates with immediate effect.
In a notification, it said though many banks had in the recent past voluntarily abolished pre-payment penalties on floating rate home loans, there was a need to ensure uniformity across the banking system.
Earlier this month, RBI had also asked the commercial banks to stop charging such penalties. RBI said the removal of foreclosure charges or pre-payment penalty on home loans would lead to reduction in the discrimination between existing and new borrowers and competition among banks will result in finer pricing of the floating rate home loans.
Labels: RBI
Ruling out a repeat of 1991 crisis situation in 2012, RBI Governor D Subbarao said the current economic situation is different from what it was two decades ago.
He said unlike 1991, the rupee's exchange rate is market determined which is our greatest strength.
India now has a 280 billion US dollar foreign exchange reserve and financial markets are resilient and robust.
Subbarao said this while delivering the K Obayya Memorial Lecture in Hyderabad yesterday.
He said unlike 1991, the rupee's exchange rate is market determined which is our greatest strength.
India now has a 280 billion US dollar foreign exchange reserve and financial markets are resilient and robust.
Subbarao said this while delivering the K Obayya Memorial Lecture in Hyderabad yesterday.
Labels: RBI
The Reserve bank of India (RBI) has permitted NRIs to send remittances more frequently. According to a latest RBI circular released on Friday, resident Indians are now allowed to receive as many as 30 remittances from NRI friends and relatives during a year as against 12 earlier.
In the circular addressed to authorised Indian agents under the Money Transfer Service Scheme (MTSS), RBI directed them to bring this to the notice to sub-agents as well and ensure the adherence to the guidelines.
Analysts said that RBI decision would boost foreign currency inflows and check rupee fall. The Indian currency has been declining continuously since March and touched a historic low of 56.38 to a dollar last month.
RBI has also asked all banks to generate a unique identification code for each of their customers. It will strengthen Know Your Customer, Anti Money Laundering and Combating the Financing Of Terrorism mechanisms.
In the circular addressed to authorised Indian agents under the Money Transfer Service Scheme (MTSS), RBI directed them to bring this to the notice to sub-agents as well and ensure the adherence to the guidelines.
Analysts said that RBI decision would boost foreign currency inflows and check rupee fall. The Indian currency has been declining continuously since March and touched a historic low of 56.38 to a dollar last month.
RBI has also asked all banks to generate a unique identification code for each of their customers. It will strengthen Know Your Customer, Anti Money Laundering and Combating the Financing Of Terrorism mechanisms.
Labels: Money Transfer Service Scheme (MTSS), RBI
Ahead of the Reserve Bank's mid-quarter review of monetary policy later this month, the country's largest lender, State Bank of India today cut its fixed deposit rates by 0.25 per cent across select maturities.
The bank has decided to revise its retail term deposit interest rates with a reduction by 0.25 per cent in tenors up to 240 days, SBI said in a statement. The new rates will be effective from tomorrow. SBI had last revised its fixed deposit rates in April, when it had slashed interest rates on fixed deposits by up to 1 per cent.
Labels: Interst rate, RBI, SBI
Reserve Bank Of India has asked banks to immediately stop charging penalty on pre-payment of home loans taken on floating interest rates.
In a notification issued from Mumbai on Tuesday, RBI has said that removal of foreclosure charges or prepayment penalty on home loans will lead to reduction in the discrimination between existing and new borrowers.
The action will also result in finer pricing of the floating rate home loans. Recently, the Committee on Customer Service in Banks chaired by M. Damodaran had observed that foreclosure charges levied by banks on prepayment of home loans were resented by home loan borrowers.
As such, foreclosure charges are seen as a restrictive practice deterring the borrowers from switching over to cheaper available source.
The committee had also said that the banks were found to be hesitant in passing on the benefits of lower interest rates to the existing borrowers in a falling interest rate scenario.
In a notification issued from Mumbai on Tuesday, RBI has said that removal of foreclosure charges or prepayment penalty on home loans will lead to reduction in the discrimination between existing and new borrowers.
The action will also result in finer pricing of the floating rate home loans. Recently, the Committee on Customer Service in Banks chaired by M. Damodaran had observed that foreclosure charges levied by banks on prepayment of home loans were resented by home loan borrowers.
As such, foreclosure charges are seen as a restrictive practice deterring the borrowers from switching over to cheaper available source.
The committee had also said that the banks were found to be hesitant in passing on the benefits of lower interest rates to the existing borrowers in a falling interest rate scenario.
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Labels: inflation, RBI, TRADE DEFICit
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