1. The merger of Bharat Overseas Bank with IOB is likely to be complete by the end of this fiscal. The first stage of acquiring shares from other stakeholders is complete and the merger will form the second stage. It has applied to the regulatory authority of Bangkok for transferring the licence of Bangkok branch of BhOB in favour of IOB.
2. RBI lifted its short-term repurchase rate by a quarter of a percentage point to 7.25%, but left its other policy rates unchanged as it stepped up its fight against inflation pressures. It raised the repurchase rate, at which it adds overnight funds to the banking system, but left the reverse repo rate, at which it drains funds, unchanged at a 4-½ year high of 6 %. It also kept its bank rate, unchanged at 6.0% and its CRR steady at 5.0%.
3. Ever wondered why the average rate of interest on credit cards is around 34% per year, when the average rate on a home loan and personal loan is around 10% and 18% per annum, respectively? One reason is the higher risk of default that banks carry due to the completely unsecured nature of the credit card product. For example, in the US, the average interest rate for a 30-year fixed rate home loan is around 6% whereas the average credit card interest rate is around 14%. This means that, in the US, a credit card is about 2.3 times more expensive than a home loan on an average.
4. State-owned banks are losing out on what was at one time a captive and profitable avenue for lending/financing procurement of foodgrains. With food procurement and offtake being low so far this fiscal, the demand for credit to fund these operations has been tepid. A lower procurement and lower stocks would signal an easing of the food subsidy bill for the government, considering that costs on account of transportation and storage would be pruned.
5. How much can you get out of a rupee a year from now? Most consumers may not spare a thought speculating on where the wholesale price index (WPI) would go a year from now, but their perception of the future value of the rupee determines almost every economic decision. For the first time, RBI has started a regular survey for measuring inflationary expectations. From a regulator’s point of view inflationary expectation in the minds of the consumer is a crucial input for policy making.
6. Banks may not hike interest rates immediately either on deposits or on the lending side, following the hike in repo rate by RBI on Tuesday. But the signal they have received is look at better ways to manage the available resources.
7. Banks may now sport a more friendly face to customers and improve their transparency. The malpractices in the home loan market appear to have prompted the banking sector regulator to make it clear to banks that they need to be more fair and transparent in their dealings with customers. The rap on the knuckles for banks may have come after recent reports about the kind of practices adopted by banks in the booming home loan market. While some banks resorted to a hike in their PLR only once, when it came to home loans, they were quite agile.
2. RBI lifted its short-term repurchase rate by a quarter of a percentage point to 7.25%, but left its other policy rates unchanged as it stepped up its fight against inflation pressures. It raised the repurchase rate, at which it adds overnight funds to the banking system, but left the reverse repo rate, at which it drains funds, unchanged at a 4-½ year high of 6 %. It also kept its bank rate, unchanged at 6.0% and its CRR steady at 5.0%.
3. Ever wondered why the average rate of interest on credit cards is around 34% per year, when the average rate on a home loan and personal loan is around 10% and 18% per annum, respectively? One reason is the higher risk of default that banks carry due to the completely unsecured nature of the credit card product. For example, in the US, the average interest rate for a 30-year fixed rate home loan is around 6% whereas the average credit card interest rate is around 14%. This means that, in the US, a credit card is about 2.3 times more expensive than a home loan on an average.
4. State-owned banks are losing out on what was at one time a captive and profitable avenue for lending/financing procurement of foodgrains. With food procurement and offtake being low so far this fiscal, the demand for credit to fund these operations has been tepid. A lower procurement and lower stocks would signal an easing of the food subsidy bill for the government, considering that costs on account of transportation and storage would be pruned.
5. How much can you get out of a rupee a year from now? Most consumers may not spare a thought speculating on where the wholesale price index (WPI) would go a year from now, but their perception of the future value of the rupee determines almost every economic decision. For the first time, RBI has started a regular survey for measuring inflationary expectations. From a regulator’s point of view inflationary expectation in the minds of the consumer is a crucial input for policy making.
6. Banks may not hike interest rates immediately either on deposits or on the lending side, following the hike in repo rate by RBI on Tuesday. But the signal they have received is look at better ways to manage the available resources.
7. Banks may now sport a more friendly face to customers and improve their transparency. The malpractices in the home loan market appear to have prompted the banking sector regulator to make it clear to banks that they need to be more fair and transparent in their dealings with customers. The rap on the knuckles for banks may have come after recent reports about the kind of practices adopted by banks in the booming home loan market. While some banks resorted to a hike in their PLR only once, when it came to home loans, they were quite agile.
