Interest Rates

RBI Ups Repo to 6.75%

RBI today increased the Repo rate by 0.25% to 6.75%. Repo is what banks pay the RBI for overnight (1 to 3 days) borrowing. Reverse repo, or what the RBI pays for excess cash parked with them, is up to 5.75%.

Please don't consider this a big deal just yet. here's the long term history of rates:

India Repo Rate Chart

HDFC Bk and ICICI Raise Rates, CDs quoting at 10%+

HDFC Bank and ICICI Bank have both hiked up lending rates by about 50 bps, says ET. This takes ICICI's base rate to 8.25% and HDFC Bank's base rate to 8.2%. Banks can't lend below the base rate. Most existing customer loans are linked to a "Benchmark Prime Lending Rate" (BPLR) which has also been raised appropriately.

The commercial paper (CP) and Certificates of Deposit (CD) markets seem to have gone berserk; government owned bank CDs are trading above 10% yields.

RBI Ups Rates by 0.25%

The Reserve Bank has increased interest rates by 25 basis points (0.25%) in its review meeting of Jan 2011. The monetary policy document says a lot about RBI's concerns.

RBI Keeps Rates Unchanged; Liquidity Tight

RBI keeps rates unchanged at 6.25% (repo) and 5.25% (reverse repo). 

The Statutory Liquidity Ratio (SLR) is down to 24% (down 1%). There’s also a relaxation of another 1% of assets under a temporary liquidity facility until Jan 28, 2011.

Inflation: November 2010

WPI monthly inflation for Nov 2010 was announced at 7.48% – substantially lower than the last month’s 8.58%.