ID :
34303
Sat, 12/06/2008 - 21:06
Auther :
Shortlink :
http://m.oananews.org//node/34303
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RBI cuts key rates; ushers in measures to stimulate economy
Mumbai, Dec 6 (PTI) Signalling a low interest rate
regime, Reserve Bank of India Saturday cut key short-term
lending and borrowing rates by 100 basis points each and
pumped in Rs 11,000 crore for housing and micro industries to
induce demand for propelling economic growth.
The short-term lending rate (repo) has been brought down
to 6.5 percent, while the overnight rate at which it borrows
from banks (reverse repo) has been slashed to 5 percent with
effect from Monday.
The unscheduled rate cut, as was being demanded by
bankers, signals lowering of lending rates to customers,
especially in the realty sector that has been facing the brunt
of the global economic slowdown.
The measures, along with a Rs 11,000 crore refinancing
facility to the National Housing Bank and Small and Industrial
Development Bank of India, would make available primary
liquidity of over Rs 3,00,000 crore to the system, RBI
Governor D Subbarao told reporters.
The measures themselves were made possible because of
easing of inflation to a seven-month low. Friday's
announcement of a cut in petrol and diesel prices are expected
to put the lid on rising prices.
Besides the cut in key rates, the apex bank allowed
certain category of banks to buyback their foreign currency
convertible bonds from customers as they are now available at
attractive rates.
Exporters facing payment problems due to the global
downturn would be given credit facility at subsidised rates.
The new rates, which signal a soft interest rate regime,
will come into effect from Monday.
RBI has since October reduced the short-term lending rate
by 250 basis points. After several months, the central bank
has slashed the reverse repo to 5 percent.
The reduction in short-term interest rates will result in
reduction of the cost of funds for the banks and will enable
them to improve flow of credit to productive sectors of the
economy on viable terms, Subbarao said.
The RBI, however, did not change Cash Reserve Ratio
(CRR), the amount of deposits which banks are required park
with the apex bank.
In order to encourage the housing finance companies to
provide more funds to the real estate sector, the RBI Governor
said that housing loans of less then Rs 20 lakh should be
treated as priority sector lending.
Exports, which has been reeling under the impact of the
global downturn, has been provided some more sops. Henceforth,
the subsidised interest rate applicable to the post-shipment
credit will be extended to overdue bills for 180 days. PTI
TEAM
DEP
regime, Reserve Bank of India Saturday cut key short-term
lending and borrowing rates by 100 basis points each and
pumped in Rs 11,000 crore for housing and micro industries to
induce demand for propelling economic growth.
The short-term lending rate (repo) has been brought down
to 6.5 percent, while the overnight rate at which it borrows
from banks (reverse repo) has been slashed to 5 percent with
effect from Monday.
The unscheduled rate cut, as was being demanded by
bankers, signals lowering of lending rates to customers,
especially in the realty sector that has been facing the brunt
of the global economic slowdown.
The measures, along with a Rs 11,000 crore refinancing
facility to the National Housing Bank and Small and Industrial
Development Bank of India, would make available primary
liquidity of over Rs 3,00,000 crore to the system, RBI
Governor D Subbarao told reporters.
The measures themselves were made possible because of
easing of inflation to a seven-month low. Friday's
announcement of a cut in petrol and diesel prices are expected
to put the lid on rising prices.
Besides the cut in key rates, the apex bank allowed
certain category of banks to buyback their foreign currency
convertible bonds from customers as they are now available at
attractive rates.
Exporters facing payment problems due to the global
downturn would be given credit facility at subsidised rates.
The new rates, which signal a soft interest rate regime,
will come into effect from Monday.
RBI has since October reduced the short-term lending rate
by 250 basis points. After several months, the central bank
has slashed the reverse repo to 5 percent.
The reduction in short-term interest rates will result in
reduction of the cost of funds for the banks and will enable
them to improve flow of credit to productive sectors of the
economy on viable terms, Subbarao said.
The RBI, however, did not change Cash Reserve Ratio
(CRR), the amount of deposits which banks are required park
with the apex bank.
In order to encourage the housing finance companies to
provide more funds to the real estate sector, the RBI Governor
said that housing loans of less then Rs 20 lakh should be
treated as priority sector lending.
Exports, which has been reeling under the impact of the
global downturn, has been provided some more sops. Henceforth,
the subsidised interest rate applicable to the post-shipment
credit will be extended to overdue bills for 180 days. PTI
TEAM
DEP
