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RBI may cut benchmark lending rate by 0.25% in May

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rbi monetory and credit policy RBI Governor D Subbarao will announce the Monetary Policy Statement for FY14 on May 3, 2013 The Reserve Bank may cut the benchmark short-term lending rate by about 0.25% in its annual monetary policy next month in the backdrop of declining inflation and the urgency to promote growth, say economists.  “Right now, conditions should enable the RBI to cut the repo rate. We expect a cut of 25 basis points (or 0.25%) in its policy in May and may be by another 25 bps in the next review,” HDFC Bank Chief Economist  Barua said.  RBI Governor D Subbarao will announce the Monetary Policy Statement 2013-14 on May 3, 2013.  YES Bank Chief Economist Shubhada Rao said RBI may cut the repo rate or the short-term lending rate by about 0.25% in May as inflation has come down and there is a need to fuel economic growth.  “Taking cue from inflation, we believe that RBI could take this time…To cut rate, particularly, the way we have seen inflation in the past coming down. Given the strong deceleration in growth, we think RBI may cut repo rate by 0.25% in May as well as may provide some liquidity easing,” Rao said.  Wholesale prices (WPI), a measure of inflation, softened to 5.96% in March after an annual rise of 6.84% in February, the lowest rate since November 2011.  “If you look at the incremental data WPI, IIP in the last two months, that data is in favour of the 25 basis points rate cut. We are expecting a cut in repo rate in May,” Anubhuti Sahay, Economist, Standard Chartered Bank said.  Industry has been batting for a rate cut to tide over the problems concerning poor demand, low industrial output and subdued economic growth.  The Index of Industrial Production (IIP), the key gauge to measure industrial activity, slumped to 0.6% in February from 4.3% a year ago because of poor performance in manufacturing coupled with contraction in power generation and mining output. India’s economic growth rate is estimated to slip to a decade’s low of 5% in 2012-13, pulled down by poor performance of manufacturing, agriculture and services sectors.
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RBI may issue clarification on bank licences by early May

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rbi It released guidelines for new bank licenses in Feb this year, asking aspirants to submit applications by July 1, 2013

RBI may issue clarification on bank licenses by early May. It released guidelines for new bank licenses in Feb this year, asking aspirants to submit applications by July 1, 2013. The Reserve Bank is likely to issue by early next month clarifications on new bank license guidelines as sought by interested entities, a senior RBI official has said.

“We have received queries from various entities. RBI will be posting on its website all the relevant clarifications with regard to new bank license guidelines by this month end or early next month so that they get ample time to file applications,” a senior RBI official said.

RBI released guidelines for new bank licenses in February this year, asking the aspirants to submit applications by July 1, 2013.

Many large business groups such as Anil Ambani-led Reliance Group, L&T, Mahindra, Birlas, Religare and Videocon have already made public their intentions to apply for the licenses, while many NBF C including Shriram group, Indiabulls, India Infoline, IFCI and PFC have also shown interest. Those reported to be interested in banking license also include Tatas and Mukesh Ambani-led RIL group.

However, the RBI is expected to follow a conservative approach and allow 4-5 new players in an already highly competitive banking sector.

Many aspirants have roped in former bank chiefs and other senior bankers from India and abroad as consultants to help them prepare for seeking the license. Interestingly, many real estate players have shown initial interest despite their financial positions not being entirely in adherence to the norms spelt out by the RBI.

After July 1, the last date of application for bank license, RBI will make public names of all the interested entities. RBI last gave bank licenses around a decade back.

Many clarifications could be relating to interpretation of various clauses of the new bank license norms, as many entities had complained of ‘ambiguity’ on various fronts in the guidelines.

The applicants from the NBFC space have also sought to know whether RBI would allow conversion of all their Tier-1 branches and locations into bank branches in case of the transfer of their existing activities into various banking functions.

They have sought to know what will happen to the Tier 1 branches that are not allowed to be converted to bank branches, sources said.

As per RBI’s guidelines, those eligible to apply for banking license include entities or groups in the private sector, entities in public sector and Non-Banking Financial Companies through a wholly-owned Non-Operative Financial Holding Company (NOFHC).

Clarifications have also been sought on the corporate structure of the NOFHC as well. RBI has said the NOFHC shall be wholly owned by the promoters and should hold the bank as well as all the other financial services entities of the group.

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Focus Turns to Hunt for Bombing Motive

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Task Force To Question Injured Teen

Investigators in the Boston Marathon bombing case shifted their focus Saturday to hunting for a motive and preparing charges after apprehending 19-year-old college student Dzhokhar Tsarnaev Friday night.

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Wisdom teaches you everything

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Sunrise Theatre Of Life

Ignorance makes us believe that life functions haphazardly. Wisdom teaches you that everything that happens in this theater of life has profound significance. What we see today is not the fruit of chance, but a fruit from seeds planted in the past. Plant seeds of peace now and you will create a life of peace in the future  

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Polls to help economy grow by 6.4% this fiscal: Goldman

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 inflation

Wall Street brokerage Goldman Sachs today projected an ‘above-consensus’ growth of 6.4 per cent for the current fiscal on factors like the upcoming general elections which, it said, will increase government spending, lower interest rates and lead to action on the policy front. 

“We reiterate our above-consensus GDP growth forecast of 6.4 per cent. The key to an improvement in activity is a pickup in the investment cycle,” it said in a report. It said higher government capex coupled with falling rates and policy reforms to ease bottlenecks and manufacturing export growth will drive investments during the ongoing fiscal. 

Yesterday, the UN pegged the calendar 2013 growth at 6.4 per cent, while the ADB last projected that the domestic economy would reach 6 per cent in the current fiscal. In the budget, the government had pegged growth at between 6.1 and 6.7 per cent. Rating agency Crisil had lowered its FY14 growth estimate to 6 per cent from the earlier 6.4 per cent earlier this week. 

Official estimates suggest the economy might have expanded 5 per cent in the recently concluded fiscal, the lowest in ten years. “The year before the elections is generally associated with increased government spending. Indeed, government spending (as a percentage of GDP) has increased the year before the elections, in each of the last four general elections,” it said. 

While stating this also increased the possibility of a higher fiscal deficit, it called it a “positive stimulus to the economy.” 

Crisil had cast doubts whether the government will be able to achieve its stated objective of reigning-in fiscal deficit at 4.8 per cent. Among other reasons cited include the expected lowering of interest rates by the RBI, besides a drive on the policy front to expedite projects. 

“Ongoing policy reforms to bottleneck infrastructure and other investments, particularly, the Cabinet Committee on Investments can help,” the Goldman Sachs report said. Additionally, other factors like the improvement in the global economic climate will also act as a “tailwind,” Goldman said. 

The report pointed out to data displaying some “green shoots” like that on the index of industrial production, exports, and non-food credit.

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Nifty Future Daily View- Traders should Watch 5720 levels carefully.

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Nifty Future

(Updated on 17.04.13 at 08.30 AM)

We were shouting form last 3-4 sessions that

Nifty future would not break below 5500.

See what has happened. Nifty future has travelled

from 5503 to 5708 in just two sessions.

Market Direction for Today………..

Traders should Watch 5720 levels carefully.

If doesn’t trade above 5720 except slide up to 5675.

Support @ 5673-5653.

Above 5713-5720 may rally up to 5732-5757.

Hurdle at 5760-5777.

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