Reserve Bank of India raised repo rate by 25 bps to 7.5 percent in its mid-quarter policy review. The move sent shockwaves through the investor community which culminated into sharp sell-off in the equity market. The policy, however, reduced the marginal standing facility (MSF) rate by 75 basis points from 10.25 per cent to 9.5 percent and lowered the minimum daily maintenance of the cash reserve ratio (CRR) from 99 percent to 95 percent of the requirement, effective from the fortnight beginning September 21, 2013. Consequently, the reverse repo and Bank Rate rates stand adjusted to 6.5 percent and 9.5 percent, respectively. The RBI ruled out additional change in minimum daily maintenance of the CRR but clarified that further actions need not be announced only on policy dates. Reacting to the policy announcement, the rupee fell 1 percent, bond yield rose to 8.3 percent, and share prices of banking stocks witnessed a sharp decline . Benchmark indices gave up all the gains accumulated in anticipation of a growth-oriented RBI policy and the positive outlook post Fed's no-taper policy on September 18 . Contrary to market expectations, the new governor Raghuram Rajan's maiden policy came in as hawkish, primarily because it maintained the traditional apex bank's views on (controlling) inflation. The RBI noted that WPI inflation, which had eased in Q1 of 2013-14, has started rising again as the pass-through of fuel price increases has been compounded by the sharp depreciation of the rupee and rising international commodity prices. "What is equally worrisome is that inflation at the retail level, measured by the CPI, has been high for a number of years, entrenching inflation expectations at elevated levels and eroding consumer and business confidence," Rajan's policy stated. Most of the economists polled by CNBC-TV18 were expecting the RBI to bring down the daily requirement to 90 percent of CRR, while a few expected it to come down below 90 percent. Jahangir Aziz of JPMorgan had opined that MSF should be brought back to its old level and instead repo rate should be hiked by about 50 bps. In a bid to control liquidity, the RBI had last month restricted banks from borrowing at 7.25 percent from the repo window. It had forced them to borrow at a higher rate of 10.25 percent from MSF.

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the Reserve Bank of India raised repo rate by 25 bps to 7.5 percent in its mid-quarter policy review. The move sent shockwaves through the investor community which culminated into sharp sell-off in the equity market. The policy, however, reduced the marginal standing facility (MSF) rate by 75 basis points from 10.25 per cent to 9.5 percent and lowered the minimum daily maintenance of the cash reserve ratio (CRR) from 99 percent to 95 percent of the requirement, effective from the fortnight beginning September 21, 2013. Consequently, the reverse repo and Bank Rate rates stand adjusted to 6.5 percent and 9.5 percent, respectively. The RBI ruled out additional change in minimum daily maintenance of the CRR but clarified that further actions need not be announced only on policy dates. Reacting to the policy announcement, the rupee fell 1 percent, bond yield rose to 8.3 percent, and share prices of banking stocks witnessed a sharp decline . Benchmark indices gave up all the gains accumulated in anticipation of a growth-oriented RBI policy and the positive outlook post Fed's no-taper policy on September 18 . Contrary to market expectations, the new governor Raghuram Rajan's maiden policy came in as hawkish, primarily because it maintained the traditional apex bank's views on (controlling) inflation. The RBI noted that WPI inflation, which had eased in Q1 of 2013-14, has started rising again as the pass-through of fuel price increases has been compounded by the sharp depreciation of the rupee and rising international commodity prices. "What is equally worrisome is that inflation at the retail level, measured by the CPI, has been high for a number of years, entrenching inflation expectations at elevated levels and eroding consumer and business confidence," Rajan's policy stated. Most of the economists polled by CNBC-TV18 were expecting the RBI to bring down the daily requirement to 90 percent of CRR, while a few expected it to come down below 90 percent. Jahangir Aziz of JPMorgan had opined that MSF should be brought back to its old level and instead repo rate should be hiked by about 50 bps. In a bid to control liquidity, the RBI had last month restricted banks from borrowing at 7.25 percent from the repo window. It had forced them to borrow at a higher rate of 10.25 percent from MSF.

Read more at: http://www.moneycontrol.com/news/economy/rbi-ups-repo-rate-by-25-bpsinflation-concerns-cuts-msf_953423.html?utm_source=ref_article

Reserve Bank of India raised repo rate by 25 bps to 7.5 percent in its mid-quarter policy review. The move sent shockwaves through the investor community which culminated into sharp sell-off in the equity market. The policy, however, reduced the marginal standing facility (MSF) rate by 75 basis points from 10.25 per cent to 9.5 percent and lowered the minimum daily maintenance of the cash reserve ratio (CRR) from 99 percent to 95 percent of the requirement, effective from the fortnight beginning September 21, 2013. Consequently, the reverse repo and Bank Rate rates stand adjusted to 6.5 percent and 9.5 percent, respectively. The RBI ruled out additional change in minimum daily maintenance of the CRR but clarified that further actions need not be announced only on policy dates. Reacting to the policy announcement, the rupee fell 1 percent, bond yield rose to 8.3 percent, and share prices of banking stocks witnessed a sharp decline . Benchmark indices gave up all the gains accumulated in anticipation of a growth-oriented RBI policy and the positive outlook post Fed's no-taper policy on September 18 . Contrary to market expectations, the new governor Raghuram Rajan's maiden policy came in as hawkish, primarily because it maintained the traditional apex bank's views on (controlling) inflation. The RBI noted that WPI inflation, which had eased in Q1 of 2013-14, has started rising again as the pass-through of fuel price increases has been compounded by the sharp depreciation of the rupee and rising international commodity prices. "What is equally worrisome is that inflation at the retail level, measured by the CPI, has been high for a number of years, entrenching inflation expectations at elevated levels and eroding consumer and business confidence," Rajan's policy stated. Most of the economists polled by CNBC-TV18 were expecting the RBI to bring down the daily requirement to 90 percent of CRR, while a few expected it to come down below 90 percent. Jahangir Aziz of JPMorgan had opined that MSF should be brought back to its old level and instead repo rate should be hiked by about 50 bps. In a bid to control liquidity, the RBI had last month restricted banks from borrowing at 7.25 percent from the repo window. It had forced them to borrow at a higher rate of 10.25 percent from MSF. jhini.phira@network18online.com Watch Video Source: CNBC-TV18 1 0 inShare Share on Tumblr SHARE . EMAIL Coolpix for every occasion - Sponsored Ad It's smart to save money. It's smarter to save energy. - Sponsored Ad Related News No revival till 2014 polls; rate hike to hit infra: Gammon Short term rates will continue to stay high: SBI chairman Ship is safe in harbour, but it is made to sail in the sea Free Commodity tips ways2capital.com/free-trial/ Free Commodity tips 2 days trial. Call now 08962000225 Product Suppliers www.hktdc.com Connect with over 120,000 suppliers from Hong Kong, China and Taiwan Ads by Google More from Moneycontrol Buy YES Bank, says Sudarshan Sukhani (Moneycontrol) Prefer IDFC, Tata Global Beverage: SP Tulsian - Moneycontrol.com (Moneycontrol) L&T a long term bet: Rakesh Tarway (Moneycontrol) Nifty may slip to 5550, says Mohit Gaba (Moneycontrol) Arttd'inox gives steel products the designer edge (Moneycontrol) More from the web The Best Way to Optimize Your Retirement Portfolio (Compare 429 Credit Cards - Apply for the Best Credit Cards) LinkedIn Part 3 – How to set up a great LinkedIn profile! (Author Marketing Experts, Inc.) MACAU – A day of high life in Macau (TTGmice) Who’s Winning ‘Mobile Wars’ (Beyond the Book) Modern slavery generates profit of over $32 billion (WALK FREE) Recommended by Set email alert for SBI Yes Bank HDFC Bank ICICI Bank Tags: CRR, RBI , MSF, inflation, liquidity, repo rate Expect no fireworks from RBI today; may ease MSF: JPMorgan Cannot let guard on rupee, inflation slip: C Rangarajan Post Your Comments Comments 28 Is Raghuram Rajan's policy following the same hawkish stance as his predecessor? Type your message here DILEE New Member 0 Follower Overall it is a good policy stance taken by Rajan, Market is poised to go down and it was expected that any thing comes out of the meet would be taken negativeley. Neverthless banks will never go back to the level we have seen in July and expect they will recover sooner that later. 4 hrs 5 min 25 sec ago vuppala194 8 Platinum Member 386 Followers The upping of Repo Rate is meaningless, as it cannot and never did influence FOOD INFLATION in last 2 1/2 years of Subba Rao`s hawkish Policy. But, that said, during these 2 1/2 years, Banks` profitability continued to remain when interest rates were going up almost every 2 months once. So, Banks` profitability will not be affected at all by Repo Rate Hike. They will maintain their present margins. The easing of liquidity will only add to their loanable funds and loans - and therefore, adds to their Profits. Hence, the adverse market reaction especially towards banking sector is meaningless. Banks will be healthy wherever NPAs are less. Only NPAs and not Repo rate will be the criterion. Thus, all private sector Banks will continue to do well - even better - after this Monetary Policy review. 5 hrs 57 min 56 sec ago Show all messages GET QUOTE Most Popular Top News Sensex, Nifty flat ahead of RBI policy; Ranbaxy loses 5% Sensex, Nifty off day's low on Raghuram Rajan's comments Fed move may have set stage for deeper correction Buffett lauds Ben but laments lack of investment bargains Govt must return Air India to Tatas: Jitendra Bhargava DIPP tells Walmart to invest in India before 2014 elections RBI ups repo rate by 25 bps on inflation concerns, cuts MSF Sensex falls; RBI cuts MSF rate by 0.75%, ups repo by 0.25% The party's on in emerging markets-here's why Why is India's healthcare system in such a sorry state? How technology can save India's vanishing generation Embrace Innovations founder on keeping Indian infants warm MOST RECENT India's primary health care needs quick reform What does it take to make healthcare more accessible? Click Here! Action in State Bank of India News Short term rates will continue to stay high: SBI chairman Sep 20, 15:30 Views Exit SBI, says Prakash Diwan Sep 20, 14:15 News Continue to see extreme liquidity tightness: SBI head Sep 20, 10:30 Technicals SBI closes above 50-Day Moving Average of 1679.39 today. Sep 19 News SBI ups lending rate to 9.8%, makes loans costlier Sep 19, 14:45 Views Book profits in SBI, says Rajesh Agarwal Sep 19, 14:30 Announcements SBI to revise rates upward Sep 19, 08:45 Views Hold SBI with a long term view: Phani Sekhar Sep 16, 18:00 Views Exit SBI around Rs 1800-1900, advises Nooresh Mirani Sep 16, 18:00 Views Shardul Kulkarni positive on L&T, SBI, ICICI Bank Sep 06, 19:00 Views Bet on SBI, may rise 8-10%: Atul Badkar Sep 06, 12:00 Technicals SBI closes above 30-Day Moving Average of 1616.23 today. Sep 05 Views Buy SBI; target Rs 1700: Shardul Kulkarni Sep 05, 16:00 Views Exit SBI, says SP Tulsian Sep 05, 14:30 Views Hold State Bank of India; target Rs 134: Firstcall Research Sep 05, 13:15 News Rajan talks about deepening mkts, plugging leakages: SBI Sep 04, 20:30 Views Sell SBI around Rs 1500, advises Sanjeev Agarwal Sep 04, 17:30 Views Stay away from banking stocks: Gautam Chhaochharia Sep 04, 10:45 News SBI raises stake in Indonesian subsidiary to 99% Sep 03, 08:00 News New banks: RBI zeroes on 5 for panel to screen applications Sep 02, 19:00 Set SMS Alerts on SBI Related Stories More from Find out: India's property trends for April-June 2013 7 important reasons to review your financial plan Other Headlines Exit SBI, says Prakash Diwan SBI, ICICI, HDFC twins fall 5-7% on RBI's surprise move Video of the day News Videos Sep 20 2013, 17:24 No revival till 2014 polls; rate hike to hit infra: Gammon - in Business Sep 20 2013, 12:35 Continue to see extreme liquidity tightness: SBI head - in Business Follow moneycontrol.com Facebook Twitter Google Plus RSS Wap SMS SMS Alert iPad iPhone Blackberry OVI Android Window Explore Moneycontrol STOCKS A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Others MUTUAL FUNDS A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Live Sensex Public Sector Banks Market Statistics Plan Insurance Global Market Business News Mutual Fund Best Portfolio Manager Bse Sensex Nse Nifty Share Market Live Commodities Price Silver Price/Rate in India Gold Price/Rate in India Crude Oil USD to INR Bank Fixed Deposits Company Fixed Deposits Small Savings Schemes Bonds Budget: 2011, 2012, 2013 RBI Credit Policy News Archive Financial Glossary Message Board Moneybhai Latest Movie Songs India`s Premiere Technology Guide History India Latest News IBNLive News News in Hindi Cricket News Latest Videos Business Technology News & Videos MTV India Online Study Material Restaurants in Delhi Online Shopping in India Singapore Airlines Onions Ranbaxy Laboratories Gold Fitch Group Attari Eveready Industries India MCX Stock Exchange Mergers and acquisitions Heavy Engineering Corporation Rss Feeds Site Map | About Us | Contact Us | Feedback | Advertise | Bookmark | Disclaimer | Privacy Statement | Terms of Use | Careers Copyright © e-Eighteen.com Ltd. 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