Bankers want the Reserve Bank of India (RBI) to cut the cash reserve ratio (CRR), or the portion of bank deposits that is kept with the central bank, in its quarterly policy on Tuesday to ease pressure on liquidity. A cut in CRR, they say, will bring down the cost of money. Corporations want RBI to cut its policy rate— a more effective tool—to pare their cost of borrowing.
The Indian government’s outgoing chief economic adviser Kaushik Basu has said inflation is a “partially-understood discipline”. I bet he is a bit generous in his assessment. The ideal way of putting it could have been inflation in India is a “hardly understood” or a “much misunderstood” discipline.
at top of PSU banks? India’s government-owned banks have something to cheer about. For the first time, the public sector banks, which account for about 70% of the banking assets in the country, will have three women chief executive officers (CEOs). In its 43-year history, the state-run banking industry has had only 3 women chiefs, including Nupur Mitra, the current chairperson of Dena Bank in Mumbai, who will step down in December.
In the first quarter of fiscal 2013 (till 15 June), banks in India invested a little more than Rs 30 in government bonds out of every Rs 100 they had in deposits. Under the central bank’s norms, banks are required to invest Rs 24 for every Rs 100 deposits they raise, but they are investing much more. It is not because they love to invest in government bonds that are being sold in the market to bridge the deficit, but the investment in sovereign bonds is risk-free and they prefer this when bad loans for most banks have been rising.
Corporations and industry lobbies were hugely disappointed with the decision of the Reserve Bank of India (RBI) to hold interest rates steady in its mid-quarterly monetary policy in June. With the economy slowing rapidly, many expected the central bank to cut rates. RBI governor D.