In the current scenario, where the liquidity is awash, the RBI has effectively increased the rates without touching the repo rate by narrowing the policy corridor.
In a nutshell, the RBI is hawkish on inflation, bullish on growth, proactive on liquidity management and serious about non-performing assets (NPA) resolution.
All eyes will be on the Governor Urjit Patel's commentary on the inflation target and how he approaches the ultimate cpi goal of 4 percent.
"Excess CRR requirement will additionally cost the banking system Rs 1,050 crore on a monthly basis," India Ratings and Research said in a note here today.
In a statement, the central bank said that all scrapped currency notes held in their chests will be counted as part of their cash balance.
The Reserve Bank has raised the cash deposit or reserve ratio limit for banks to contain liquidity surge post demonetisation. However, it has also assured it will revisit the limits once the government issues an adequate quantum of Market Stabilisation Scheme bonds. Here are 5 things you should know about MSS bonds and how they will help.
RBI hiked the cash reserve ratio (CRR) over the weekend to 100 percent on the increase in net demand and time liabilities on cash accrued between September 16 and November 11. Normally, hiking CRR signals a tightening in lending rates, but that is the last thing the government or the central bank would like to do.
Speaking to CNBC-TV18 from the sidelines of Pune Inc Conclave Power Minister Piyush Goyal said demonetisation has huge advantages. It will take India to digital banking and make it a cashless society.
Nilesh Shah, MD, Kotak Mahindra AMC is confident that market will not move in a unidirectional manner but would remain volatile, adding that although he has not turned bearish on the market, he would focus more on ground realities.
Speaking to CNBC-TV18 Ananth Narayan of Standard Chartered Bank said that the market will continue to remain in excess liquidity. Lack of credit offtake, economic slowdown in the quarter coupled with surplus deposits in banks will mean a soft corner for bonds, he said.
With a move to managing the excess liquidity in the system banking regulator Reserve Bank of India announced today that it woujld absorb a part of this extra cash by applying an incremental cash reserve ratio (CRR) as a purely temporary measure.
Reserve Bank of India (RBI) Governor Raghuram Rajan, who bows down next month, kept the repo rate unchanged at 6.50 percent at his final policy review on Tuesday after inflation hit a nearly two-year high.
Reserve Bank Governor Raghuram Rajan kept key rates unchanged at his last policy review before he bids adieu early September.
Ahead of the Reserve Bank of India‘s monetary policy on Tuesday, a CNBC-TV18 poll shows that the outgoing RBI Governor Raghuram Rajan is unlikely to cut interest rate. Markets, however, are going to keep an eye out for the central bank‘s stance on liquidity.
The RBI left its policy rates unchanged, while cautiously signalling it could cut later this year if monsoon rains, and other factors, dampen upward pressure on food prices.
Raghuram Rajan said the outflow from the concessional swap facility to get foreign currency non-resident (bank), or FCNR (B) deposits could be USD20 billion.The RBI governor reiterated the central bank's commitment to supply short-term funds into the banking system and said the transmission of policy rate cuts remains a work in progress.
Despite favourable weather forecasts, India is not immune to the risk of a renewed rise in food prices, the Moody's note said. It highlighted a possible depreciation in the rupee arising from adverse global events as the other key risk to staying below the inflation target.
Consumer Price Index (CPI) based retail inflation excluding food and fuel edged up in April. Services inflation also remained elevated on account of house rents, water charges, tuition fees and taxi/auto fares.
"We currently forecast stress loans to peak in FY16â€”but see risk to asset quality stretching into FY17 if the macro recovery continues to be elusive and commodity prices fall," says a report by Goldman Sachs.
According to a CNBC-TV18's poll, the key repo rate, cash reserve ratio and statutory liquidity ratio rates will remain unchanged in this policy. However, this will not be the end of the rate cut cycle.
"If recent depreciation pressure on the rupee persists, we suspect that the central bank will be wary of lowering rates further," DBS said in a research note.
According to Bank of America Merrill Lynch (BofA-ML), DBS and SBI Research, the low print in inflation data, suggests that deflationary pressures are building even beyond base effects and the CPI inflation is on track to RBI's under 6 percent January 2016 target.
Retail inflation in India is likely to average around 5.6 percent this year, down from 6.1 percent in financial year 2014-15, says a DBS report.
Interest rate on domestic term deposits has been reduced between 0.10 percent and 0.50 percent on select maturities with effect from August 10, PNB said in a statement.
Services sector returned to growth in July, after two consecutive months of contraction, as new orders witnessed a surge and hiring gathered pace to hit a two-year high rate.