RBI inks info exchange pact with Bank of Israel

The Reserve Bank has signed a pact with Bank of Israel for exchange of information pertaining to banking supervision.
A Memorandum of Understanding (MoU) was signed by Hedva Ber, Supervisor of banks on behalf of Bank of Israel and Parvathy V Sundaram, Chief General Manager-in-Charge, Department of Banking Supervision on behalf of Reserve Bank of India, the RBI said in a statement today.
Experts also believe that Cash Reserve Ratio will not be
tinkered with as liquidity is sufficient.
"Nothing is going to change in this policy as CPI has not reduced to the level where the RBI wanted it to be. The market has already discounted that rate is not going to be cut this time," said a treasury head of a state-run bank.

"Even the liquidity condition in the system is sufficient, so CRR will not be altered," he added.

Another senior banker said there are expectations that nothing is going to change as this is the last policy of the Governor and a rate cut is unlikely.
According to Bank of America Merrill Lynch, however, RBI is expected to cut key interest rates by 25 basis points in its third bi-monthly policy review for 2016-17 on August 9, if good rains damp pulse price inflation.
"With good rains, pulses' sowing for the kharif season has jumped 39 per cent above last year's sowing. This should pull down pulses prices by 20 per cent and cool CPI inflation to 5.1 per cent by March," it said.

DBS, on the other hand, said RBI may keep the key interest rates on hold in the upcoming policy meet as inflation for the second quarter has hastened to 5.7 per cent and July-August prints may also stay high.
The room for further easing by the Reserve Bank is dependent on the inflation path and make-up of the monetary policy committee, it said.