|
|
RBI cuts rate by 50 basis points
|
|
|
|
Top Stories |
|
|
|
|
SME Times News Bureau | 29 Sep, 2015
Springing a surprise, the Reserve Bank of India (RBI) on Tuesday cut its
short-term lending rate by 50 basis points, but made a pitch for
passing it on to consumers in the form of cheaper personal and
commercial credit. Stakeholders expected a 25-basis-point cut.
While
the repurchase rate, or the interest charged on short-term borrowings,
stands cut to 6.75 percent, it will take commercial banks to lower their
own lending rates for personal, automobile, housing and commercial
loans to also get reduced, translating into lower EMIs.
The
indexed reverse repo rate, or the interest payable by the central bank
on short-term deposit, automatically stood reduced to 5.75 percent.
There was no cut in the 4 percent cash reserve ratio that banks have to
maintain in the form of liquid assets and designated government
securities.
"Markets have transmitted Reserve Bank's past policy
actions via commercial paper and corporate bonds, but banks have done so
only to a limited extent," Reserve Bank Governor Raghuram Rajan said in
the fourth bi-monthly monetary policy statement for the current fiscal
year.
"Median base lending rates of banks have fallen by only
about 30 basis points, despite extremely easy liquidity conditions," the
governor said.
"This is a fraction of the 75 basis points of the
policy rate reduction during January-June, even after a passage of
eight months since the first rate action by the Reserve Bank. Bank
deposit rates have, however, been reduced significantly, suggesting
further transmission is possible."
The governor also made some significant announcements, which should boost market mood.
The
limits for foreign funds' investment in central government securities
will be increased in phases to 5 percent of the outstanding stock by
March 2018. This will make additional room for investment of Rs.1,200
billion, over and above the existing limit of Rs.1,535 billion.
This
apart, Indian corporates will be permitted to issue rupee-denominated
bonds with a minimum maturity of five years in overseas locations within
the ceiling of foreign investment permitted in corporate debt -- set at
$51 billion at present.
"There shall be no restriction on the end use of funds except a small negative list."
The
markets were elated. The sensitive index (Sensex) of the Bombay Stock
Exchange (BSE) that had opened sharply lower on Tuesday morning and was
hovering around that level with a loss of some 1 percent, zoomed into
the positive territory, seconds after Rajan's announcements.
Going into growth and prices, Rajan's assessment was mixed.
"Since
our last review, the bulk of our conditions for further accommodation
have been met. The January 2016 target of 6-percent inflation is likely
to be achieved," he said, but was worried over growth -- and wanted
structural reforms and corporate actions to address this issue.
"Furthermore,
investment is likely to respond more strongly if there is more
certainty about the extent of monetary stimulus in the pipeline, even if
transmission is slow," he said about the central bank's own
contribution to lift economic activity in the country.
There was
pressure this time on the central bank to cut rates from all
stakeholders, including a veiled nudge from government functionaries,
especially since India's growth has been floundering and inflation and
the pressure on the price line has been seemingly under control and
declining.
Going forward, too, Rajan was supportive of India Inc's pleas.
"While
the Reserve Bank's stance will continue to be accommodative, the focus
of monetary action for the near term will shift to working with the
government to ensure that impediments to banks passing on the bulk of
the cumulative 125 basis points cut in the policy rate are removed," he
said.
"The Reserve Bank will continue to be vigilant for signs
that monetary policy adjustments are needed to keep the economy on the
target disinflationary path."
The Reserve Bank had last eased
lending rates during its review in June. That time it cut the repo rate
7.5 percent to 7.25. Accordingly, the reserve repo rate also stood cut
by an equal margin.
June also saw the the third repo rate cut
this calendar year, after a 25-basis-point cut each in January and
March. In the case of cash reserve ratio the monetary authority has been
maintaining status-quo, leaving it unchanged at 4 percent since 2013.
The statutory liquidity ratio was brought down by 50 basis points to 21.5 percent in February this year.
|
|
|
|
|
|
|
present interest rate
Devendra Kumar Budhia | Thu Oct 1 12:21:49 2015
Sir,
We are a SSI Unit. We had earlier a C/C limit of 60 lacs. We applied for extension upto 1 crore and the same has been sanctioned. sanction letter says interest rate shall be 13.5 %, but due to this decrese in the repo rate, this rate should be reduced or not?
Up till now we have not submitted the documents. Please clarify. thanks.
Regarding we want to loan for develop the business.
R.B.Singh | Wed Sep 30 01:17:53 2015
The scheme launch by Central government we appreciate to Central Gov. the scheme launch for benefits of small & medium industrial. We support to you gov person for launch this scheme, we will be want to benifits of this scheme.
THANKS AND BEST REGARDS
R.B.Singh ( 09540920590 )
PRS INFOTECH & ENGINEERS (Herbal Division).
Raged office :352 HARI Bihar Adarsh Nagar Ballabgarh 121004 Faridabad ( Haryana ) India.
Branch Office:Bhagaya Bhawan 202 2nd Flour 5R/8 Above deepak Colour Lab NIT Faridabad 121001(Haryana) India.
|
|
|
|
|
|
|
Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
|
|
Daily Poll |
|
|
PM Modi's recent US visit to redefine India-US bilateral relations |
|
|
|
|
|
Commented Stories |
|
|
|
|
|
|
|
|