‘Fresh monetary steps will soften interest rates’ – 1 November 2, 2008
Posted by dhirendra1972 in Commercial Banks, Current Scenario, financial market, Government Securities, Key Rates, Monetary Measures, Uncategorized.Tags: Banking System, Interest Rate, Repo Rate, World Bank
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Good morning to all of you there! As one of my habits, I always make sure that I will be updated with all the news in our country. I want to share with you this article as it was reference to “The Times of India”.
Interest rates will soften in the coming weeks and liquidity will improve in the banking system following sudden cuts in key rates by the
Reserve Bank of India (RBI) Saturday, a leading banking consultant said.
“In the current scenario, maintaining stability of the financial market should be the top priority. In this context, the latest monetary measures can be viewed as the RBI’s big bang strategy to have a positive impact on the banking system and the financial markets,” World Bank consultant and former Corporation Bank chairman B.R. Ramamurthy told said.
In a dramatic weekend decision earlier Saturday, the RBI reduced the repo rate by 50 basis points to 7.5 percent, the cash reserve ratio (CRR) by 100 basis points to 5.5 percent and the statutory liquidity ratio (SLR) by 100 basis points to 24 percent.
Repo rate is the interest charged by the central bank on borrowings by commercial banks, CRR is the minimum cash banks have to keep with the RBI, while SLR is the amount banks have to maintain as government securities.
“The reduction in repo rate, CRR and SLR will generate high level of confidence in the industry, as productive credit will be available at lower rate. The monetary measures will augur well for the growth of the economy, as access to funds at lower interest rate has been made possible,” Ramamurthy added.
