RBI rates unchanged as rains hit food prices

No relief yet for retail consumers while banks are facing fall in credit growth

GN Bureau | April 7, 2015


#RBI   #reserve bank of india   #repo rate   #CRR   #cash reserve ratio   #lending   #credit   #rains  

The Reserve Bank of India in its first monetary policy statement for the new financial year 2015-16 has not changed both the repo rate and the cash reserve ratio (CRR) due to increased food prices after unseasonable rains in the country.

The repo rate, at which the RBI lends to banks, has been retained at 7.50 percent. The CRR for banks has also been kept unchanged at 4 percent. The CRR is the percentage of total funds that the banks have to keep with the RBI. The RBI uses the CRR to drain out excessive liquidity out of the banking system.

Unseasonal rainfall in parts of the country has pushed up prices of winter crops with the damage to wheat and pulse in the range of 25-30 percent of the crop yields.

The policy is geared more towards systemic changes, RBI Governor Raghuram Rajan said at a press conference on Tuesday.

Rajan has cut the repo rate twice this calendar year, once in January and again in March, both outside of the policy review cycle. RBI had lowered its policy rate by 25 basis points to 7.50 percent on March 4, after a similar cut on January 15, on the back of softening inflation and the government's commitment to continue with the fiscal consolidation programme.

However, most banks have been loath to pass on the cuts to borrowers, largely because of the pressure it would put on already-stressed margins, as well as a rising non-performing assets.

This has led to a fall in credit growth The lack of credit growth has also been pointed to as a key reason why industry has been unwilling to borrow funds domestically, and has instead turned to cheaper overseas funds.

Meanwhile, the consumer price index rose 5.37 percent in February, marking a fifth consecutive month of staying within the RBI's target of 2 to 6 percent.

First Bi-monthly Monetary Policy Statement, 2015-16

The Monetary Policy Report – April 2015: Click here

Comments

 

Other News

Diamonds are Forever: A Saturday story

Saturday Stories By Rashmi Bansal HarperCollins, 176 pages, Rs 250 From the bestselling author of ‘Stay Hu

Oracle Adds AI Capabilities to Oracle Analytics Cloud

Oracle has showcased new AI-powered capabilities within Oracle Analytics Cloud. Leveraging the Oracle Cloud Infrastructure (OCI) Generative AI service, the new capabilities assist analytics self-service users to more quickly and efficiently conduct sophisticated analysis and make better business decisions

Domestic airlines show 38.27% growth in passenger numbers

The domestic aviation industry has witnessed a remarkable surge in passenger traffic during the first eight months of 2023. According to the latest data analysis, the number of passengers carried by domestic airlines from January to August 2023 reached an impressive 1190.62 lakhs, marking a substantial inc

MPs bid adieu to historic parliament building, step into new building

A function was organised in the Central Hall of Parliament on Tuesday to commemorate the rich legacy of the Parliament of India as the Members came together to bid adieu to the historical building before stepping into the New Building of Parliament. Prime Minister Narendra Modi, Lok Sabha sp

Real action, not words alone, needed to achieve UN agenda 2030: civil society

As politicians and policymakers make speeches at the United Nations during a high-level summit next week to assess the lack of progress on the 2030 Agenda and the Sustainable Development Goals (SDGs), people’s leaders representing some of the world’s most marginalised communities have come toge

Fourth GPFI G20 meeting pledges to work for universal financial inclusion

The fourth G20 Global Partnership for Financial Inclusion (GPFI) meeting held in Mumbai during September 14-16 concluded with members agreeing to work towards the vision of universal financial inclusion under the new G20 Financial Inclusion Action Plan. Over the course of three days, discuss

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now


Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter