ICICI Bank says India interest rates have bottomed out
MUMBAI, September 8, 2009 (Reuters): Lending and borrowing interest rates in India have
bottomed out and rates will harden from here, managing director of ICICI Bank
(ICBK.BO), India's No. 2 lender, said on Tuesday. Chanda Kochhar also said that credit growth in Asia's third-largest economy was
likely to pick up in the second half of this year.
India to seek info on some cases from Swiss banks
New Delhi, Aug 25 (PTI) A day after Swiss banks said it will not allow India to
'fish' for details about illegal money stashed in their banks, Government of
India Monday night said it was not interested in getting information on all
secret accounts held by Indians but will pursue specific cases. The Indian response to the stand by the Swiss Bankers
Association (SBA) that it will not allow "name-fishing expeditions" came from India Finance Minister
Pranab Mukherjee even as the government came under attack from the opposition
for not "properly" making efforts to unearth black money parked in Switzerland.
"They (Swiss Bankers Association) have not refused (to divulge information).
They have suggested they are not for fishing and we are also not interested in
fishing their whole list (of bank accounts)," Mukherjee told reporters
World Bank, India agree on $1.2 bln loan for banks
NEW DELHI, August 14, 2009 (Reuters) - India has finalised negotiations for a $1.2
billion loan from the World Bank to help recapitalise state-run banks, a bank
spokesman said on Monday. The spokesman said the board of the World Bank board had to approve it at a
meeting in late September, and signing of the loan agreement would take another
one or two months. Last year, the World Bank's India head said the bank agreed to increase lending
to $14 billion for three years, including loans for recapitalising state-run
Govt to sell stakes in 6-7 more firms
NEW DELHI, august 18, 2009 (Reuters) - The government will sell stakes in at least
six to seven more state-run firms in the next 12-14 months, Finance Secretary Ashok Chawla said on Tuesday.
Last week, state utility NHPC Ltd's initial public offering for up to $1.25
billion was subscribed 23.53 times, stock exchange data showed, a response that
would embolden the government to hurry up stake sales in more firms. Chawla also said the government was confident of meeting the annual target for
direct tax receipts for 2009/10 (April/March).
Two-day nation-wide bank strike on August 6 and
Bangalore, August 5, 2009: The United Forum of Bank Unions (UFBU),
which represents more than 7.5 lakh workers and officers in the banking industry, has confirmed that it
would proceed with its strike on August 6 and 7.The UFBU convenor, C.H. Venkatachalam, said the unions have rejected
the Indian Banks’ Association’s (IBA) wage revision offer made late in the night on August 4. Mr. Venkaatachalam said the IBA
offered a wage increase of 17.5 percent, which was higher than its earlier offer of 13 per cent.
However, the bank managements’ insistence that employees also accept
a pension scheme whose terms would be reviewed every year was not acceptable to the UFBU, he said. “The IBA’s insistence that we accept its
package deal is unacceptable because it is conditional on us accepting the pension package, which is against the interest of the employees,” hesaid.
One of the contentious issues is the UFBU’s demand that 2.5 lakh employees in the industry (and 50,000 retired employees) be given another option to opt for a pension scheme instead of the
provident fund scheme. According to the UFBU, the scheme is expected to cost Rs.17,000
crores, of which Rs. 11,000 crores would be available from existing PF reserves. The UFBU said employees are willing to contribute
Rs. 1,800crores for the scheme. Mr. Venkatachalam said the IBA, had, in June, agreed to meet the remaining cost amounting to
Rs. 4,200 crores. Apart from the 7.5 lakh employees of public sector banks, staff and
employees of private and foreign banks are also likely to participatein the strike, Mr. Venkatachalam said.
Nine central banks join settlement systems group
ZURICH, July 24, 2009 (Reuters) - Nine central banks -- including those from China and India --
have joined the Committee on Payment and Settlement Systems (CPSS), the Bank for
International Settlements said on Friday. The CPSS -- a forum for central banks to monitor developments in
payment, clearing and settlement systems and in cross-border and multicurrency settlement schemes -- now has 23 members. Its secretariat is hosted by the BIS.
The new members are: Australia, Brazil, China, India, Mexico, Russia, Saudi
Arabia, South Africa and South Korea.They join Belgium, Canada, the European Central Bank, France, Germany, Hong Kong, Italy, Japan, the Netherlands, Singapore, Sweden, Switzerland, Britain and
the US. The chairman of the committee is William Dudley, president of the Federal
Reserve Bank of New York.
State Bank of India sees rates rising in 6 months
KOLKATA, July 13, 2009 (Reuters): State Bank of India, the country's top lender, sees interest
rates rising by up to 100 basis points in six months if cash conditions tighten, its chairman said on Monday. Banks are now flush with cash but this could come under pressure after the
government last week announced record borrowings of 4.5 trillion rupees ($92
billion) in 2009/10 and as economic activity picks up in the coming months.
"There is a possibility of interest rates going up by 25 to 100 basis points, if
liquidity is not managed well when the busy season picks up," O.P. Bhatt told reporters on the sidelines of a banking seminar. He was referring to the second half of the fiscal year that began in April.
Commercial bank lending rates have fallen by about 200 basis points since last
October after the central bank slashed its main lending rate by 425 basis points
to lift a slowing economy.
Petrol price up by Rs. 4, diesel by Rs. 2
NEW DELHI, July 02, 2009: Following a rise in the international price of crude oil and the increasing
under- recovery of State-run Oil Marketing Companies (OMCs), the United Progressive Alliance government on Wednesday increased the
price of petrol by Rs.4 a litre and diesel by Rs.2 a litre. The hike comes on the eve of the budget session of Parliament. However, domestic LPG and kerosene were spared, keeping in mind the interests of
the “aam aadmi.” The decision to hike the prices was taken at a high-level meeting held
under the chairmanship of Prime Minister Manmohan Singh. It was attended by Congress president Sonia Gandhi and Petroleum and Natural Gas
Minister Murli Deora.
The hike came into effect from midnight on Wednesday. It is understood that Ms. Gandhi turned down the proposal of the Petroleum Ministry to increase LPG and kerosene prices, stating that
these would directly impact the poor and women in particular. At a news conference here, Mr. Deora said the hike was necessitated
because international crude oil prices had doubled to $70 a barrel since December. Mr. Deora said the government had decided not to raise the domestic LPG
and kerosene prices despite the public sector oil companies losing Rs.92.96 per gas cylinder and Rs.15.26 on a litre of kerosene. After the increase, petrol in Delhi will cost Rs. 44.63 a litre and diesel
Rs. 32.87.Limiting losses
Petroleum Secretary R.S. Pandey said this was an ‘ad hoc’ increase in fuel prices aimed at
limiting the Rs.170 crore a day loss the Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited incurred on the sale of petrol, diesel, domestic LPG and kerosene. Oil companies were losing Rs.5.82 a litre on petrol and Rs.3.62 a litre on diesel in Delhi, but the hike announced was lower than the desired increase, Mr. Pandey said.
Transporters are likely to raise freight rates on Thursday after the hike in diesel and petrol rates, a move traders said would increase the prices of fruits and vegetables. “We will meet tomorrow to take stocks of the situation,” All-India Motor Transport Congress senior official Deepak Sachdeva toldPTI.
World Bank preconditions may delay $3.2-bn loan to banks
June 18, 2009: World Bank preconditions may delay a $3.2-billion loan for recapitalisation of more than a dozen government-owned banks by six to seven months, according to a senior finance ministry official. The World Bank is understood to have asked the government to reduce its stake in the banks and do away with concessional lending rates for priority sector. It has also sought a road map—a broad business plan—of the banks, which will be recapitalised with this loan. The government, however, is in no hurry to meet these conditions, and negotiations between both sides are on. “The pre-conditions are not acceptable. Besides, the capital adequacy ratio of our banks is well above the prescribed norm of 9%,” said the official, who did not wish to be named.
The loan period is also a sticky issue. The government plans to infuse around Rs 16,000 crore in 16 banks by 2011. It is keen on World Bank funds because of the relatively low
3-4% interest; a loan from other sources could take the borrowing cost up to 9%. There are 25 state-owned banks and the government has already infused Rs 3,800 crore into Uco Bank, Central Bank of India and Vijaya Bank. It now aims to infuse another Rs 1,700 crore into United Bank of India, Dena Bank and Maharashtra Bank. While United
Bank of India will be allocated Rs 700 crore, the remaining amount will be distributed between Dena Bank and Maharashtra Bank. Source: The Economic Times
Bank staff plan one-day strike on June 12
MUMBAI, Jun 5, 2009 (Reuters): About 800,000 employees of Indian banks plan
to go on a one- day strike on June 12 for higher wages and to oppose outsourcing,
a union representative said on Friday. Staff at state-run banks, which dominate India's banking, as also at some
private sector and foreign banks will participate in the strike, said C.H.
Venkatachalam, convenor of the United Forum of Bank Union."We have been in talks for wage increase for the past 1-½ years. Now we need
them to do it immediately," he said.
RBI whip not for Tata Motors’ bond issue?
Mumbai, June 01, 2009: The Reserve Bank of India (RBI) has come down hard on banks like SBI,
which are looking to guarantee large corporate bond issues raising concerns
about possible systemic risk. Yet the RBI has been pushed into making an exception for the Tata Motors' bond
issue, guaranteed by SBI, which seems to have slipped through the RBI's eyes
simply on account of different interpretations of the existing rule.
Ratan Tata's decision to raise Rs 4200 crore, through bonds with an explicit
guarantee from OP Bhatt's SBI, has left the RBI in a tough spot.
Just weeks after SBI went ahead and guaranteed the Tata Motors’ bond issue
despite concerns raised by RBI, the central bank has been forced to plug a
loophole in its regulations. It has been directed to make it clear through a
circular that “Banks are advised not to provide guarantees for issuance of bonds
or debt instruments, adding that guarantees by the banking system could have significant systemic implication." Despite the RBI's stern words, it has been has pushed into making an exception
for the Tata Motors’ bond issue, although Deputy Governor Shyamala Gopinath had
raised concerns before the issue went to the market. - NDTV
Fiscal consolidation should be budget priority: RBI
Mumbai, May 22, 2009 (PTI): Reserve Bank today said the new UPA government, which is slated present the Budget some time in July, should resist pressure for another stimulus as sustained
economic recovery would require fiscal consolidation in medium term.
"Given the still soft economy, the pressure to provide more stimulus will persist. While this may help in the near term, the sustainability of recovery requires returning to responsible fiscal
consolidation," Reserve Bank Governor D Subbarao said.
The fiscal stimulus packages and other measures initiated by the government to mitigate the impact of global financial crisis on the country have led to a sharp rise in expenditure and fiscal deficit, he said.
"The challenge for fiscal policy is to balance immediate support for the economy with a need to get back on track on
the medium-term fiscal consolidation process," Subbarao told a seminar here."Managing this trade off between our short term compulsions and long term sustainability will be one of the big challenges," he said. PTI
India gold investment turns negative for first time
SINGAPOR , may 21, 2009 (Reuters):- Investors in India, the world's largest gold consumer, sold 17 tonnes of bullion in the first quarter of 2009, marking its first disinvestment ever, while investment demand plunged more than 70 percent in Vietnam on import restrictions, industry data showed on Thursday.
China, the world's second-largest consumer, saw demand for investment falling to 16.1 tonnes in the first quarter from 16.7 tonnes in the same period last year, according to the World Gold Council.
India's jewellery demand suffered because of high prices and a slowdown in the economy, with
consumption falling 52 percent to 34.7 tonnes in the first quarter of this year. "The first quarter of 2009 was an exceptional one for India as a 'perfect storm' of events resulted in the lowest quarterly demand for gold jewellery in at least 20 years, while retail investment demand turned negative for the first time on record."
India's gold imports fell 83 percent in the first quarter as higher prices and deteriorating domestic economic conditions dented consumer demand, the WGC said.
SBI cuts deposit rates by up to 50 bps
MUMBAI, May 14, 2009:: The country’s largest lender, State Bank of India, on Tuesday cut deposit rates across various maturities by up to 50 basis points, prompting many analysts to suggest it was only a matter of time before the bank revises its lending rates. The bank had last cut its Benchmark Prime Lending Rate (BPLR) — a rate used by bankers for pricing corporate and retail loans — in January this year. Bankers say SBI has the highest cost of funds among large banks and the third cut in a single month for deposit rates should enable it to pare this cost.
Over the past fiscal, the bank had aggressively offered above-market deposit rates to customers. Having mobilised the funds, the bank was aggressive while lending in the March 2009 quarter, as witnessed by the expansion of its loan book by 30% over this period. This was much higher than the industry growth rate of a little over 17%.
March exports slump by a third, outlook bleak
NEW DELHI, May 1, 2009 (Reuters): India's exports declined by a third in March to $11.5
billion, its sixth straight fall, and analysts said the global economic slump
would further hurt overseas sales by Indian firms in the months ahead.
Imports fell by 34 percent to $15.56 billion in March from a year earlier due to
a slowdown in Asia's third largest economy and moderate global crude prices ,
narrowing the trade deficit to $4 billion in March from $6.32 billion a year ago.
"The impact of global economic crisis on India is going to be higher in 2009/10
compared to (the) previous year," said N.R. Bhanumurthy, an economist at the Institute of Economic Growth.
"After achieving a robust growth for four consecutive years, India's export
growth started showing negative trend since October 2008 and is expected to
continue for the rest of the year due to recessionary situation in most
industrialized nations," he said. India's exports stood at $168.7 billion in the fiscal year to March, up a paltry
3.4 percent from 2007/08, while imports grew 14.3 percent to $287.8 billion in
2008/09, official data showed on Friday.
Bank of Baroda net profit soars 172%
MUMBAI, April 27, 2009:: Bank of Baroda has posted an increase of 172 per cent in its net profit to Rs 75269 lakh for the quarter ended 31st March 2009 as against Rs 27644 lakh for the quarter ended 31st March 2008. Company’s interest earned increased by 24.24 per cent to Rs. 413878 lakh for the quarter ending on 31-MAR-2009 against Rs. 333107 lakh for the quarter ending on
31-MAR-2008. For the year ended, Bank of Baroda has posted an increase of 55 per cent in its net profit to Rs 222720 lakh for the year ended 31st March 2009 as against Rs 143552 lakh for the year ended 31st March 2008. The company for the quarter ended 31st March 2009 has posted an increase of 27.74 per cent in its interest earned to Rs 1509158 lakh as against Rs 1181347 lakh for the quarter ended 31st March 2008.
India sells 120 billion rupees of 2019, 2034 bonds
MUMBAI, April 24, 2009 (Reuters) - The Reserve Bank of India (RBI) said on Friday it
had set a cut-off price of 99.38 rupees at the auction of the 6.05 percent
federal bonds maturing in 2019 and the bonds were fully sold. The cut-off price corresponds to a yield of 6.1338 percent. A Reuters poll
earlier in the day had forecast the central bank selling the 2019 bonds at 6.1455 percent.
The central bank said it set a cut-off price of 103.04 rupees at the auction of
the 7.50 percent federal bonds maturing in 2034. The cut-off price corresponds
to a yield of 7.2349 percent and the bonds were fully subscribed.
Banks plan to restructure Rs 80K cr loans
CHENNAI, April 23, 2009: While banks are busy finalising their books for the last fiscal, many of them are on an overdrive restructuring certain accounts to rein Top 20 Global Banks
For instance, Indian Overseas Bank (IOB) has restructured close to 90,000 accounts amounting to Rs 5,000 crore. "We are mostly restructuring healthy accounts. All these business concerns are profitable but they are facing some cash flow problem currently on account of the economic meltdown," explains Y L Madan, the bank's executive director. He says if the bank hadn't undertaken this exercise at this juncture, nearly 40% of the restructured accounts would have turned into
NPAs. Similarly, Indian Bank has also done a 'substantial
re-schedulement of its advances'
India's economy is slowing: IMF
Washington, March 18, 2009 (PTI): India's growth is likely to slowdown to 6.25 per cent in 2008-09 on falling corporate investment and deteriorating global outlook, the International Monetary Fund has said. Partly reflecting the deteriorating global outlook, IMF, which concluded its India consultations on March 6, in a statement projected Indias growth to moderate to 6.25 per cent in 2008-09 and further to 5.25 per cent in 2009-10.
However, India has forecast growth at 7.1 per cent for 2008-09.
The Fund said corporate investment, the major growth driver during recent years, is expected to slow because of weakening profitability and confidence, and tightening of financing conditions from foreign and nonbank sources. In a statement, the world body said policy measures to stimulate Indian economy and a good harvest should support domestic demand. "The uncertainty surrounding the forecast is unusually large, with significant downside risks. The main upside risk stems from a larger-than-anticipated impact of the stimulus measures that the authorities have already implemented." After last years record of 9.2 per cent of GDP, the IMF said the capital inflows are expected to decline this fiscal year. Till December 2008 portfolio investment recorded a US USD 11 billion outflow. PTI
Global economy set to shrink, India loses 5 lakh jobs
WASHINGTON, March 09, 2009: With over 5,00,000 jobs lost in India alone in recent months, the World Bank predicts the global economy and global trade would both Financial crisis shrink this year for the first time since World War II. While the global economy is likely to grow at least 5 percentage points below potential in 2009, world trade is on track to record its largest decline in 80 years - with the sharpest losses in East Asia.
World Bank forecasts show that global industrial production by the middle of 2009 could be as much as 15 per cent lower than levels in 2008, it said in a paper for next Saturday's meeting of the Group of 20 finance ministers and central bank governors. Developing countries face a financing shortfall of $270-700 billion this year, as private sector
creditors shun emerging markets, and only one quarter of the most vulnerable countries have the resources to prevent a rise in poverty. The paper said that 94 out of 116 developing countries have
experienced a slowdown in economic growth. Of these countries, 43 have high levels of poverty.
To date, the most affected sectors are those that were the most dynamic, typically urban-based exporters, construction, mining, and manufacturing. The World Bank said that international financial institutions cannot by themselves currently cover the shortfall-that includes public and private debt and trade deficits-for these 129 countries, even at the lower end of the range.- The Economic Times
RBI rate cut to help ease lending rates
NEW DELHI, March 5, 2009 (Reuters): The Reserve Bank of India (RBI) reduction of policy rates late on Wednesday will provide an impetus for Indian commercial banks to reduce their lending
rates. Economic Affairs Secretary Ashok Chawla said on Thursday. He also said the cash reserve ratio was not cut as there was adequate liquidity in the banking system and the central bank's rate cut was aimed at reviving growth.
"It will provide adequate impetus to banks to lower their lending rates. Reviving growth is obvious end-objective," Chawla told reporters. India's central bank cut its short-term lending and borrowing rates by 50 basis points each on Wednesday, saying the country's growth had been hit more than expected by the global financial crisis and downturn.
The Indian rupee and stock market dropped to a record low
MUMBAI, March 3, 2009 (Reuters): The Indian rupee dropped to a record low
beyond 52 per dollar on Tuesday, undermined by a slump in the stock market to
its lowest close in more than three years as investors became more risk averse.
Dealers said sporadic dollar selling by the central bank via state-run banks
stemmed the decline, but analysts predicted more weakness for the friendless local unit in the coming weeks.
The partially convertible rupee ended at 51.95/97 per dollar, 0.11 percent below
Monday's close of 51.90/92, after hitting a lifetime low of 52.20 per dollar in
afternoon trade. It has fallen 2 percent so far this week and is down 6.7 percent so far in 2009.
It fell more than 19 percent last year. "There are only outflows in the market and dollar buying is coming from all
quarters, be it companies, importers, banks," said P.V. Rao, head of currency
trading at IndusInd Bank in Mumbai.
Kamal Nath unveils interim trade policy
New Delhi, February 26 2009: In yet another stimulus-cum-populist move, the government, on Thursday announced the interim trade policy for the year 09-10. Kamal Nath announced Financial crisis reduction in customs duty under the EPCG scheme from 5% to 3 per cent.
Fixing an export target for fiscal 09-10 at $200 bn, he said that exports had grown to $162 billion in 2008 and will touch $175 billion for FY 09. The export sector
created 1400000 new jobs this fiscal, he added. India had achieved a growth of 30.9 per cent till September this year.
Exports from India's special economic zones are expected to touch $18 billion in the year to March 2009, he told a news conference on Thursday. India is likely to suffer less, and recover fast from global crisis, he added
Govt cuts excise, service tax by addl 2%
New Delhi February 24, 2009: Finance Minister Pranab Mukherjee today announced an
across- the-board cut in excise and service tax rates, as a part of the third stimulus package to boost the domestic economy.
In his reply to the interim budget speech, Mukherjee announced a two
percentage point cut in service tax rates to 10 per cent.
Mukherjee also announced that on goods that attract 10 per cent excise duty will now be charged at 8 per cent. However, excise rates on items that attract 8 per cent and 4 per cent excise duty will not be changed.
The cut in excise duty have been extended beyond March 31, 2009. But
Mukherjee did not specify the date till which the excise cut has been extended. Excise duty on bulk cement has been fixed at 8 per cent or Rs 230 per
tonne. Mukherjee announced that customs duty exemption on Naptha will continue beyond March 31, 2009.
Economic Affairs Secretary Ashok Chawla said that Rs 30,000 crore will be the total revenue loss because of both the excise and the service tax rate cuts. Former Finance Minister P Chidambaram welcomed the excise duty cuts and said that it would help stimulate demand. “In my view what the Finance Minister has done is commendable.” He has reduced excise duty by 2% on the highest slab and has also reduced service tax by 2%, he said. “The bulk of the excise revenues come from that rate and therefore reduction of 2% on the excise duty and 2% on service tax if it is passed to the consumer it will stimulate demand.”
RBI staff to go on strike on February 20
NEW DELHI, February 10, 2009: The Reserve Bank of India's employees would go on one-day nation-wide strike on February 20 to press for restoration of updated pension scheme and other issues. The main reason for the strike is an internal circular issued by the bank at the behest of the Finance Ministry to withdraw an updated pension scheme to pre-November, 1997 retirees, said All India Reserve Bank Employee Association Secretary K K Sharma.
The circular announces a drastic reduction of pension to retired RBI employees in relation to that drawn by the government retirees of comparable levels, he said. All the employees, he said, right from Chief General Manager rank to a class IV group would go on strike which is likely to affect clearing operations.
RBI to limit impact of govt borrowings on interest rate
MUMBAI, February 7, 2009: The Reserve Bank of India (RBI) has sought to assuage concerns over the excess government borrowing pushing up interest rates. The central bank on Friday
promised that the government borrowing would be carried out in the least disruptive, market-friendly and transparent manner.
With the stimulus package and lower-than-expected tax collections putting pressure on finances, the Centre has been forced to borrow in excess of its target. There are fears that additional
borrowing may create an oversupply of bonds and crowd out investments. But some bond dealers are hoping that part of the government deficit would be monetised. The central bank did not rule out this possibility. Mr Subbarao said: “We will maintain a very comfortable liquidity position. There are several
measures we can take in this endeavour.” Responding to the recent lowering of India’s growth
estimate to 5% by the International Monetary Fund, he said: “We have said that 2009-10 will be an even more difficult year. IMF number is for calendar year 2009, which encompasses the most difficult period. We have noted IMF numbers.”
RBI maintains status quo on interest rates
MUMBAI, January 27, 2009: The Reserve Bank of India maintained status quo on interest rates in its third quarter review of the Monetary Policy for 2008-09. The central bank left its repo rate, reverse repo rate and the cash reserve ratio (CRR) unchanged on Tuesday.
In his first policy presentation, Governor Dr. D. Subbarao kept the Bank Rate unchanged at 6.0 per cent. The repo rate has been kept unchanged at 5.5 per cent, and so has the reverse repo rate been kept steady at 4.0 per cent under the
LAF. The cash reserve ratio (CRR) of scheduled banks has also been kept unchanged at 5.0 per cent of NDTL.
The RBI has extended up to Sep 30, 2009 the refinance facilities announced on Nov 1, allowing banks to avail liquidity support under the LAF for meeting the funding requirements of mutual funds, NBFCs and housing finance companies through relaxation in the maintenance of SLR up to 1.5 per cent of their
NDTL. The special refinance facility for scheduled commercial banks (excluding
RRBs) up to 1.0 per cent of each bank’s NDTL as on Oct 24, 2008, has also been extended to Sep 30, 2009. Both these facilities are currently available up to June 30, 2009.
Home and corporate loans to get cheaper
MUMBAI, January 03, 2009: Home loan and corporate borrowers have something to cheer about early in the year. Interest rates on home and other loans, particularly for Tax deduction on home loan
corporates, are set to fall soon. The Reserve Bank of India (RBI) has cut its key policy rate by one percentage point, signalling a reduction in banks’ lending rate. This time, banks that many corporates still see as reluctant to lend, have reacted swiftly. Union Bank of India was the first to announce a 25-75 basis point cut in deposit rates across maturities
on Friday night. The reverse repo, the rate RBI pays to banks for parking funds with it, was slashed by one percent from 5% to 4%, the lowest ever. The cash reserve ratio, the slice of deposits that banks need to park with RBI, has also been reduced by 50 basis points to 5%. This is the fourth time since early October 2008 that the central bank has eased its monetary policy stance, after having adopted a tight policy since October 2004. The liquidity infused into the financial system through these
measures amounts to Rs 300,000 crore.
Citi Bank likely to slash interest rates
MUMBAI, January 1, 2009: After majority of Indian banks slashed their interest
rates taking a cue from Reserve Bank's recent policy signals, leading foreign lender, Citi Bank is likely to follow the suit by cutting its lending and deposit rates in near future.
Citi is considering an upto 0.5 per cent cut in its deposit rates and a similar reduction in its benchmark prime lending rates, a top Citi Bank Official said.