RBI achieves neutral banking system
The Dollar Business Bureau The Reserve Bank of India effectively achieved the ‘neutral’ banking system from cash-crunch zone faced 3-4 months back. The neutral system will help the customers to gain quick benefits from RBI’s rate cuts. On the account of Rs 80,000 crore Open Market Operation, purchases in last three months and decline in cash circulation in June, the central bank achieved the desirable neutral liquidity in 1st quarter, said India Ratings Research. OMO mechanism helps the RBI to infuse or draw out the cash from the banking system. The cash crunch in Feb-March period was as high as Rs 1.4 lakh crore. According to RBI reports, by June cash surplus was seen in range of of Rs 19,700- 31,700 crore The report stated ...
Rajans exit may risk FCNR deposits
Deepak Kumar Barely a day after RBI governor Raghuram Rajan announced his exit through a letter to his colleagues in RBI, several domestic analysts on Sunday predicted his departure could invite outflow of funds by foreign portfolio investors from the Foreign Currency Non-Resident deposits (FCNR), leading to a deteriorating impact on the rupee value. Though his term ends on September 4 this year, the impact of his statement could have repercussions in the market much sooner than imagined. Rajan’s letter brings to an end speculations over his extension of governorship at RBI. “Rajan’s presence in RBI served as an assurance to the NRI as well as the foreign investors. His departure would invite outflow of funds by the foreign portfolio investors and ...
RBI slashes interest rate by 0.5%
Himanshu Vatsa Bureau | The Dollar Business The Reserve Bank of India on Tuesday reduced the repo rate by 0.5%, triggering hope to enhance the domestic investment cycle and push growth. “On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 50 basis points from 7.25% to 6.75% with immediate effect,” the RBI said in its fourth bi-monthly monetary policy for the current financial year. A cut of 50 basis points is the steepest in four-and-half-years. Earlier, the central bank had reduced the repo rate by 75 basis points in three tranches during this fiscal. Justifying the reduction, RBI Governor Raghuram Rajan said that ...
Government mulls sugar export to China under quota
Source: PTI The government is considering a proposal to allow sugar mills to export to China under the preferential quota system as part of a strategy to help them liquidate surplus stocks. India exports 10,000 tonnes of white sugar to the EU and 8,100 tonnes to the US through the preferential quota system, under which exports are permitted at low tariffs. After the quota is reached, a higher tariff is applied on additional exports. Food Minister Ram Vilas Paswan had said last week that the government is considering barter trade of sugar against import of farm items like pulses from some countries. “Besides barter trade, we are exploring sugar export under the quota system to China. We are also looking at ...
RBI puts G-Sec worth Rs 10,000 crore up for auction next week
The Dollar Business Bureau In an effort to mop up liquidity from the system, the Reserve Bank of India (RBI) will sell government bonds worth Rs. 10,000 crore in the open market next week. The RBI has decided to sell government securities under Open Market Operations after “an assessment of the current and evolving liquidity conditions”. Securities with maturity dates ranging from 2018 to 2035 will be auctioned on July 14 through multi price method. “There is an overall aggregate ceiling of 10,000 crore for all the securities in the basket put together. There is no security-wise notified amount,” the central bank said in a statement issued on Friday. Securities to be auctioned will bear interest rates ranging from 7.40% to ...
