RBI likely to act aggressively to inflation now

Inflation prevailing in the Indian market has hampered the growth of the economy to a considerable extent. The Reserve Bank of India is trying its level best to tame it but till now all such attempts have been proved to be futile. RBI tried to restrain it through various measures but almost all the times inflation emerged as victorious.

In order to trick inflation and to rein it, RBI has been hiking its policy rates consistently due to which the lending rates offered by the banks to the customers have gone real high but in this condition the Central Bank is left with very limited options.

RBI has been very cautious in hiking the policy rates and has been hiking the rates in a systematic manner; but now RBI is expected to hike the policy rates by 50 points at once in the monetary policy review scheduled for May 3.

The chief economist at HDFC Bank Mr. Abheek Barua said "They have to move by about half a %age point in the May policy just to signal to the market that they are trying to catch up to the curve."

Central Registry: an effective measure to check home loan frauds

To discard the fault practices prevailing in real estate sector the Reserve Bank of India has introduced The Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) that will contain database of the mortgaged properties to the lenders.

The records will be made available on the website and a person can access the home loan details on the mortgaged property by just paying a fee of Rs. 50 electronically. Central Registry is also expected to help home loan market as the lender will be sure about the authenticity of the property offered as security.

"Availability of such records would prevent frauds involving multiple lending against the security of same property as well as fraudulent sale of property without disclosing the security interest over such property," said RBI.

The facility is still in its initial stages as it was made operational from March 31 and the records will be made available to both lenders as well as to any other person.

Borrowers can take it easy for a while

The Reserve Bank of India has been desperately trying to control the soaring inflation but so far has not achieved much success in it. In an effort to tame inflation, the central bank raised its key policy rates 8 times since March 2010 but the target is yet to be accomplished.

The impact of hike in the policy rates was seen directly in the lending and borrowing rates as with the policy rates the lending and borrowing rates also kept soaring. Due to that at one hand the people who have invested in the deposits were earning more and more and on the other hand the borrowers were bearing the burden of escalating lending rates.

But now, when the liquidity in the system is very much in control the borrowers can breathe easy. The Chairman and managing director of Punjab National Bank Mr. K R Kamath said "As of now, no. There is enough liquidity in the system today. So to that extent I think that there is no immediate pressure on interest rates."

Most of the banks are waiting for the announcement of annual credit policy fro 2011-12, that is scheduled for May 3. Lenders will decide their plan of action once the credit policy is announced; but till then the borrowers can take it easy.

RBI to issue guidelines on banking licenses very soon

The Reserve Bank is to grant banking licenses to the corporate plays and to ensure smooth proceedings RBI will issue guidelines about it in next 15-20 days.

The Financial Services Secretary Mr. Shashikant Sharma said “Very soon, we will have a final discussion with Finance Minister Pranab Mukherjee on the draft and then we can go ahead and give a green signal to it.”

During the Union Budget Finance Minister Mr. Pranab Mukherjee announced the plans of issuing banking licenses by March 31.

The big corporate players including Reliance Capital, India Bulls, Religare, IFCI and Aditya Birla Financial Services are expected to apply for the banking licenses.

Despite best efforts inflation still on a high

The inflation condition prevailing in the Indian market has disturbed the whole market equilibrium and that is why The Reserve Bank of India is under a lot of pressure. The Central Bank is doing every thing that it can to rein inflation.

As a part of such an effort RBI hiked repo and reverse repo rates eight times in the past one year due to which the interest rates have shoot up considerably causing a lot of disturbance for the banks and to keep their profit banks pass that hike to the borrowers, causing a lot of problems to the borrowers.

To give customers some comfort the bankers urged requested RBI to not top raise the repo and reverse-repo rate any more. But regardless that the inflation rate is still quite high then RBI’s comfort level and that is why economists expect RBI to continue raising rates to keep inflationary expectations under check.

RBI issues banking License to Rabobank

In a bid to increase the presence of foreign banks in the country, the Reserve Bank of India has issued the license to Netherlands based Rabobank.

Presently the banks is registered as a Non-Banking Finance Company (NFBC) in the country after the approval from Central Bank, it will be free to provide gamut of banking services in the Indian market that includes accepting deposits, deal in foreign exchange, domestic fixed income products and trade finance.

Member of the Rabobank Executive Board Group Sipko Schat said “India is a key country for Rabobank. We are now able to offer a broader range of products and services to our Dutch, Indian and international clients.”

RBI allow banks to hike check clearance charges

Reserve Bank of India has given liberty to the banks to hike the service charges in the clearing of outstation cheques above Rs. 1 Lakh. To some relief, the service charges for the cheques below 1 lakh are kept constant. The new charges are applicable from today itself.

Earlier the banks were not allowed to levy more than Rs. 150 for speed clearing of an outstation cheque of more than Rs. 1 lakh. On the other hand RBI has lowered the service charges for clearing of an outstation cheque from Rs 50 to Rs 25.

"Charges fixed should be reasonable and computed on a cost-plus-basis and not as an arbitrary percentage of the value of the instrument. The service charges-structure should not be open ended and should clearly specify the maximum charges that would be levied on customers including charges if any, payable to other banks," RBI said.