NEWS & ADVICE : FIXED DEPOSITS
RBI may not cut policy rates in its policy review in January
By Neelima Shankar
Jan 20, 2009
Print    Email    RSS   

As interest rates have started moving downwards and liquidity has eased in the economy, bankers do not expect Reserve Bank of India (RBI) to reduce its key policy rates further in the quarterly review of its annual monetary policy scheduled for January 27th.

IDBI Bank Deputy Managing Director O V Bundellu said, "Presently, banks have surplus funds following the liquidity infusions by the RBI. But the low-demand is causing supply-side issues to lenders. Given these factors, the RBI is unlikely to cut its rates further (in its quarterly review of annual monetary policy, slated for January 27)."

SBI's Chairman, O P Bhatt also said that the RBI might not cut its key-rates further soon. "At the moment, I do not expect (any cuts in the RBI key-rates)," Bhatt said.

With inflation declining in the recent weeks, there has been monetary flexibility to handle with complex economic environment and RBI is expected to announce measures that would boost up growth in the economy, said Prime Minister Manmohan Singh.

Bankers feel that RBI may signal softer interest rates but they will not touch the policy rates that were recently revised downwards. After increasing the policy rates till October, 2008 RBI has started cutting its cash reserve ratio (CRR), repo and reverse repo rates to support growth in the economy.

Presently the CRR stand at 5% while the repo and reverse repo are pegged at 5.5% and 4% respectively.

Chief Executive of Indian Banks' Association, K Ramakrishnan also agreed to the view that RBI will not disturb the policy rates in the quarterly policy review unless demand picks up in the market.

"If they (RBI) cut rates further, that would pump in more money into the system. There is already enough liquidity in the system, but a few takers for credit. The RBI may not cut its rates further in the policy," Ramakrishnan said.

The RBI measures have induced majority of the banks in the industry to reduce their interest rates.

 


(Comments Posted : 0) Post Your Comments
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
A checklist of investment options for...
How to Invest to Save?
Planning to invest in a bank FD? Think again
Things you should know while filing income...
FMPs or FDs: Make an informed choice


Sakeela.CaℒL Giℛℒs In Kharar 0985566O911...
NANGAL: CaℒL Giℛℒ In Una 09855660911 Escoℛt...
Chandigarh@CaℒL Giℛℒ In Rajpura +O9855660911...

NEWS THIS WEEK
Federal Bank launched V connect for its customers Feb 12, 2015
Andhra Bank on expansion mode Feb 11, 2015
Dena Bank earned a profit of 13%. Feb 9, 2015
Banks expected to cut down the rates Feb 5, 2015
RBI kept the rates unchanged Feb 4, 2015
News Archive