The Week That Was

The Reserve Bank of India (RBI) in its monetary policy statement kept the CRR (cash reserve ratio) unchanged at 4%,

September 20, 2013 6:46 IST | India Infoline News Service
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RBI increases repo rate by 25 bps to 7.5%

The Reserve Bank of India (RBI) in its monetary policy statement kept the CRR (cash reserve ratio) unchanged at 4%, while it hiked the repo rate by 25 bps (basis points) to 7.5% and consequently the reverse repo rate stands at 6.5%. The central bank has reduced daily CRR requirement to 95% from 99% and maintained MSF (marginal standing facility) rate to 75 bps to 9.5%. According to RBI, timing of more action on liquidity depends on stable rupee. Further action on liquidity growth may pick up in October-March if infra projects are on stream, the central bank added. The RBI steps intended to address inflationary pressures and to mitigate pressure on rupee. There is "No room for complacency for inflation," RBI said.

Monetary and Liquidity Measures

On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to:
Reduce the marginal standing facility (MSF) rate by 75 basis points from 10.25% to 9.5% with immediate effect;
Reduce the minimum daily maintenance of the cash reserve ratio (CRR) from 99% of the requirement to 95% effective from the fortnight beginning September 21, 2013, while keeping the CRR unchanged at 4.0%; and
Increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.25% to 7.5% with immediate effect.
Consequently, the reverse repo rate under the LAF stands adjusted to 6.5% and the Bank Rate stands reduced to 9.5% with immediate effect. With these changes, the MSF rate and the Bank Rate are recalibrated to 200 basis points above the repo rate...Read More

We must create a bullet proof national balance sheet: Rajan

Tata Chemicals views on RBI Mid Quarter Policy Review

Reduction in MSF is a welcome step: Radisson

RBI policy is in tune with earlier policies: KPMG

Increase in repo rate may affect realty sector: C&W

RBI attempts to balance inflation & growth: ZyFin

Cut in dailly CRR may lead to lower rates: HDFC Bank

Interest rates will remain high till inflation is down

Decision to increase repo rates comes as a surprise: Tata Housing

CREDAI: Surprised at increase in rates

ASSOCHAM reaction on RBI’s policy

HDFC Bank's views on RBI monetary policy

RBI liberalises branch authorisation policy

Banking stocks decline after RBI hikes repo rate

Banks to allot different product code to dormant a/cs: RBI

Mushtaq Ahmad to continue as Chairman, J&K Bank for 3 yrs

Banks to close a/cs using cards for online forex trade: RBI

RBI, govt consider funding for lending for cheaper loans

Microfinance does not address all needs holistically: RBI

IMC appeals for rationalization of the interest rate: IMC

Bank deposit with RBI rises 2.1% Y-o-Y

Fed postpones tapering; says economic activity has been expanding at moderate pace

Information received since the Federal Open Market Committee met in July suggests that economic activity has been expanding at a moderate pace. Some indicators of labor market conditions have shown further improvement in recent months, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth. Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term...Read More

August WPI stands at 6.1% against 5.79% in July

The August WPI (wholesale price index) stood at 6.1% as against 5.79% in July.  The inflation for manufactured products for the month of August declined 1.9% from 2.81% in July. In the same period, food inflation zoomed to 18.18% from 11.91% on month-on-month basis. The primary articles inflation stood increased to 11.72% in August from 8.99% in July, whereas inflation for fuel and power rose marginally to 11.34% from 11.31% in July. The official Wholesale Price Index for ‘All Commodities’ (Base: 2004-05 = 100) for the month of August, 2013 rose by 1.7% to 177.5 (provisional) from 175.4 (provisional) for the previous month.


The annual rate of inflation, based on monthly WPI, stood at 6.10% (provisional) for the month of August, 2013 (over August, 2012) as compared to 5.79% (provisional) for the previous month and 8.01% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 3.91% compared to a build up rate of 4.35% in the corresponding period of the previous year...Read More

CPI for All Urban Consumers boosts 0.1% in August

58 Investors file joint complaint against NSEL, Jignesh Shah, and Defaulters

Around 58 investors and 17 brokers/members of NSEL filed a criminal complaint with the EOW, Mumbai Police against NSEL, Jignesh Shah, the board of directors of NSEL, and executives of NSEL including Amit Mukherjee and Jai Bhaukhundi, auditor – Mukesh Shah and 24 defaulters and their clients. The complaint makes a case that Jignesh Shah is the brain, trust and alter ego of NSEL and primarily responsible for the affairs and the fiasco at NSEL and that he abused his position to create a false impression in the minds of investors regarding the legitimacy of the operations at NSEL. Noted senior advocate – Amit Desai along with law firm AZB & Partners is advising the complainants in the matter. The complaint makes a strong case that 99% of delivery business is a fraud, evidenced by complete absence of underlying goods and issuance of fake warehouse receipts. The complaint alleges that NSEL built its business model around trading in "non existent" goods and giving investors an impression that goods were in warehouses, when none existed and produces several documents supporting the active marketing done by Jignesh Shah. The Complaint also alleges cozy relationships between the defaulters, promoters and management wherein goods were stored in premises of the defaulters, which did not have storage capacity for stated quantities, in each case, through non-arms length relationships and in all such cases NSEL certified such warehouses – "Exchange Accredited"...Read More

Repo hike shocker...Nifty plunges 100 points

The Indian equity market ended in deep red on Friday after new Reserve Bank of India governor Raghuram Rajan, in an unexpected move, raised the repo rate by 25 basis points to 7.5%. The Sensex which crashed over 700 points pared its losses after the RBI governor clarified that the central bank's measure was effectively to bring down the cost of borrowings for banks. The central bank also revised the Marginal Standing Facility - by 75 basis points to 9.5%. Former governor D. Subbarao had raised the MSF by 200 basis points in July as part of slew of cash tightening steps aimed at rescuing the rupee. The cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, stands unchanged at 4%...Read More

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