1. Reserve Bank on Tuesday asked banks to review lending to traders of agri commodities and advances against warehouse receipts to ascertain finances are not being used for hoarding which can fan inflation."Right now we do not have any evidence. We have asked the banks to review their lending (to traders) so that we know that they are not taking undue advantage of bank finances," RBI Governor YV Reddy said at his customary post Annual Monetary Policy news conference.Through the review, the apex bank seeks to compare if there has been any significant rise in lending in these categories compared to that in previous years.
2. Bankers on Tuesday dubbed as "sensible" the marginal increase in statutory deposits - CRR - announced by RBI, saying the system had good liquidity but most of them would wait to decide on hiking lending rates."It is not my sense that interest rates should rise," market leader SBI said, while the largest private bank ICICI said it would "wait and watch" - a view shared by most of the bankers."Ultimately interest rates are subject to demand and supply. Liquidity is good... I would wait and watch," said KV Kamath, CEO and MD of ICICI Bank.HSBC India CEO Naina Lal Kidwai felt that "some banks might pass it on to the customers. HSBC would decide on its interest rates in about two-weeks."Bankers were unanimous that RBI's policy was aimed at balancing growth and containing inflation and would not hurt the industry much.
2. Bankers on Tuesday dubbed as "sensible" the marginal increase in statutory deposits - CRR - announced by RBI, saying the system had good liquidity but most of them would wait to decide on hiking lending rates."It is not my sense that interest rates should rise," market leader SBI said, while the largest private bank ICICI said it would "wait and watch" - a view shared by most of the bankers."Ultimately interest rates are subject to demand and supply. Liquidity is good... I would wait and watch," said KV Kamath, CEO and MD of ICICI Bank.HSBC India CEO Naina Lal Kidwai felt that "some banks might pass it on to the customers. HSBC would decide on its interest rates in about two-weeks."Bankers were unanimous that RBI's policy was aimed at balancing growth and containing inflation and would not hurt the industry much.
3. Unfazed by the downturn in recent IIP numbers, Mr K.V. Kamath, Chairman and Managing Director, ICICI Bank, who took over the CII President’s chair on Thursday, brushed off apprehensions of an impending slowdown in the manufacturing sector. Instead, for him, a definitive source of the situation on the ground were the quarterly results that companies put out and, what he terms, the “customer mood meter”. “I have never gone wrong with the mood meter in my last 12 years. When you meet ten customers and gather their mood, it tells you where we are going. I knew when Indian industry was coming under pressure in the 90s and when they were in dire situation in 2000 and 2001.
4. The fourth quarter of the last fiscal was a relatively lacklustre one for public sector banks.
For the 14 banks that have released their numbers, there has been an 11 per cent growth in profits. The picture might have been much worse but for the much higher profits posted by a few banks such as Bank of India and Corporation Bank. Lack of pricing power or the inability to pass on higher costs was visible.
For the 14 banks that have released their numbers, there has been an 11 per cent growth in profits. The picture might have been much worse but for the much higher profits posted by a few banks such as Bank of India and Corporation Bank. Lack of pricing power or the inability to pass on higher costs was visible.
5. Indian Bank, a public sector bank, plans to shed high-cost deposits of about Rs 2,000 crore during the first quarter of the current fiscal, its Chairman and Managing Director, Mr M.S. Sundara Rajan, has said. “Our endeavour would be to ensure that we don’t have any exposure to high-cost deposits in the coming days. We will come out of it this year. Repaying high-cost deposits will help protect my net interest margin.
6. A hike in CRR by 25 bps to 8.25 per cent in addition to the 50 bps hike announced a fortnight ago reiterates RBI’s continued focus on balancing inflation expectations through active liquidity management, says Mr Rana Kapoor, Managing Director & CEO, YES Bank. This is aimed to use liquidity management mechanism to anchor inflation expectations, while maintaining the growth momentum undisturbed by holding interest rates steady. Hardening inflation and moderating growth amidst global uncertainties spelt a tightrope walk for the RBI. It has once again managed to achieve a fine balance between inflation and growth objectives, he said. “The decision to wait for the impact of supply related initiatives by the Government and measures relating to the cash reserve ratio to pan out is prudent ,” he said.
