Banking Current Affairs 2017

Political uncertainties are among the factors impacting capital markets: RBI

The RBI in its Macroeconomic and Monetary Developments Second Quarter Review 2013-14 said that markets in India face domestic uncertainties arsing from prolonged slowdown, falling corporate earnings and rising leverage, besides risks of political uncertainties associated with the electoral cycle.

Elections are to be held in Chhattisgarh, Madhya Pradesh, Mizoram, Rajasthan and Delhi in November-December 2013. National polls are also due before the term of the current Lok Sabha ends in May 2014.

In the recent past, India’s stock markets have faced volatility on the account of fears of a tapering of the monetary stimulus by the US Federal Reserve and concerns on domestic economy.

However, as per RBI, market uncertainties remain associated with how the debt ceiling issues will play out over the next several months and whether the nascent signs of recovery in the euro area sustain.

Global financial markets also got some relief with the US Federal Reserve decision to maintain the pace of its bond purchases and its signal that withdrawal of quantitative easing may take longer. However, RBI cautioned that the financial markets could be disrupted again when the extraordinary monetary accommodation in the advanced economies is withdrawn.

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RBI hiked Repo Rate by 25 basis points to 7.75 %

As per the Second Quarter Review of Monetary Policy 2013-14 released by the Reserve Bank of India (RBI), the Repo rate has been increased by 25 basis points from 7.5% percent to 7.75% keeping in view the surge in inflation and other factors.

Key points of the Second Quarter Review of Monetary Policy 2013-14:

Marginal Standing Facility (MSF) rate slashed by 25 basis points from 9% to 8.75%.

  • Policy repo rate under the Liquidity Adjustment Facility (LAF) hiked by 25 basis points from 7.5% to 7.75%.
  • The liquidity provided through term repos of 7-day and 14-day tenor has been enhanced from 0.25% of Net Demand and Time Liabilities (NDTL) of the banking system to 0.5%.
  • Cash Reserve Ratio (CRR) untouched at 4%.

The GDP growth projection for 2013-14 has been reduced to 5% from previous 5.7%.

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