India Inc Doesn't See RBI Lowering Rates on Jul 31
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India Inc Doesn't See RBI Lowering Rates on Jul 31

Tuesday, 31 July 2012, 05:06 Hrs
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A majority of corporates and financial institutions do not expect any changes in key policy rates by RBI's in its quarterly monetary policy review next week, a survey by Royal Bank of Scotland said on 31July.



"An overwhelming 75 percent expect no change in the repo and reverse repo (short-term lending and borrowing) rates in this policy meeting, with the remaining 25 percent expecting a cut of 25-50 bps (0.25-0.5 percent)," the client survey, involving 113 corporates and financial institutions by RBS, said.



Similarly, 83 percent of the respondents said there will be no cut in the cash reserve ratio (CRR), or the amount of deposits banks have to park with the RBI, it added.



The corporates are of the view that high inflation and no initiatives from the government leave little room for the apex bank to act proactively.



Among the total clients surveyed, 54 percent of them are corporates and the balance from other financial institutions including banks, insurance companies and mutual funds.



RBI will unveil the first quarter monetary policy on July 31. The industry is clamouring for rate cuts.



While GDP growth hit a nine-year low last fiscal at 6.5 percent, inflation remains elevated at 7.25 percent for June.



Despite the poor GDP number, RBI left its policy rates and CRR unchanged at the last meeting on June 16.



On the rupee-dollar front, the survey offers some relief, saying the median expectation of the rupee is at 54 to the dollar by the end of December, which will further stabilise to 53 by this fiscal-end.


Source: PTI
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