Highlights/ Key takeaways from RBI's credit Policy announcement: Source: Business Standard
- CRR Hiked To 7.5% By 50 Bps
- Repo, Reverse Repo, Bank Rate Rates Left Unchanged
- RBI Ready To Take Steps Given Global Uncertainties & Unconventional Policy Responses To Developments
- GDP Growth Target Unchanged At 8.5%
- Inflation Target Maintained At 5%
- Reiterates Resolve To Lower Inflation To 4-4.5%, Going Forward
- Medium Target for inflation rate is 3%
- Money Supply Target Retained at 17-17.5%
- Credit growth has slipped to projected level of 24-25%;
- Need to moderate expansionary effects of capital flows so that money supply doesn't exceed target
- RBI Retains Option To conduct overnight or Longer term Repos
- Biggest Challenge For RBI is excess money supply due of Capital Flows
- Inflation Expectations Well-Anchored
- Risk To Inflation From Liquidity Infusion By global Central Banks
- Risks Inflation Also From Crude and Chinese Demand
- Risks to Inflation to Dominate Policy in the Next 12-18 months
- Inflation risks From Oil Prices remain Incipient
- Asset Prices High, But Some Evidence Of Stable Real Estate Prices
- Recent Events in Financial Markets show concern for fincl stability can assume overriding Importance
- Agriculture Growing Above Trend, Industry & Services Shows slight slackening
- Another Oil Price hike seems Reasonable
- Fiscal Consolidation Under Strain on High Interest Payments & Subsidies
- Revenue Deficit For Apr-Aug at 123% of estimates vs 94% year ago
- H1 Current A/C Deficit Expected to Have Been Contained At Year Ago Level
- Non competitive bidding for state loans to be permitted by March 2008
- State govts may prepay Power bonds from April 2008 onwards
- New system of valuing and issuing floating rate bonds by Mach 2008
- Committed to Allowing Repos in Corp Bonds, when safe settlement, DvP is in place
- Permits short sale & When Issued Deals Outside of NDS-OM System
- Non Deposit Taking NBFCs can access NDS-OM through CSGL Route
- Oil Cos Can Hedge 50% of their Inventory using OTC Derivative products
- Importers, exporters may write covered call and put options
- Importers, Exporters may write in rupee & cross currency and receive premia
- Banks permitted to Run Cross Currency Options Books; Subject to RBI Nod
- Banks permitted to offer American options
- Final Guidelines for Banking Holding Cos to be Issued By End –Nov
- Final Guidelines on Credit Default Swaps To Be Issued By End Nov
- May Bank Errant Banks from engaging recovery Agents; Ban Likely On Banks against which Court's Have Issued Penalties
Regards
BigGains !!
BigGains !!
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