A rate increase of 50 basis points and a hawkish rhetoric, a combination urgently required to address the problem of inflation, has been delivered by the Reserve Bank of India (RBI) in a bold move. There are several reasons why this policy is quite different from any other policy in this rate rise cycle.

Comment: Samiran Chakraborty

Business Standard

The Reserve Bank of India (RBI) surprised the market with a rate increase of 50 basis points, which was higher than expectations. All stocks are sensitive to interest rates and equity prices are inversely correlated to rates. However, in particular, three rate-sensitive sectors &mdash;financials, realty, and automobiles &mdash; are likely to be badly hit.

Bearish outlook for rate sensitives

RBI&rsquo;s April policy stance was more hawkish than expected. The statement suggests that RBI is ready to tolerate slower near-term growth, but not higher inflation, as the latter will derail long-run growth prospects. Surely, there is no growth/inflation trade-off in the long run, but the near-term outlook looks difficult.

Comment: Sonal Varma

The 50-basis-point rise in repo and reverse repo rates by the Reserve Bank of India (RBI), bringing these to 7.25 per cent and 6.25 per cent, respectively, is harsh and will intensify the cash crunch faced by the real estate sector. The move to increase the savings bank deposit rate to four per cent will put pressure on the cost of funds for banks. RBI must think about the industrial growth which has moderated in the last few quarters.

Comment: Pradeep Jain

RBI&rsquo;s firm and decisive monetary policy action to rein in inflation will have an adverse impact on corporate bottom lines and is likely to hurt short-term growth. However, it would lend greater stability and certainty to medium-term economic growth, which is imperative for sustained corporate performance. Going forward, the concern is this doesn't seem to be the end of monetary tightening and more rises are likely.

Comment: Prashant Ruia

There are three areas of critical importance to my company &mdash; exchange rates, inflation and yield on funds &mdash; we can deploy. The credit policy announced reflects the government&rsquo;s thinking that a tight monetary policy will tame inflation. Evidently, this is RBI&rsquo;s answer to the anticipated world scenario marked by a continuing surge in global commodity prices.

Comment: S Mahalingam

The Indian mutual fund industry's investment in the banking sector has touched new highs recently. Despite corrections post the credit policy, fund managers are finding banking stocks as valuable picks in the long term.

MFs' exposure in banks on the rise

Arbitrage, uncertainty over end-use of funds prompted RBI move.

NBFCs lose priority sector tag, see red

Wary of mark-to-market (MTM) losses due to hardening yields on government securities, banks have reduced the average tenor in their bond trading books.

MTM loss worries prompt banks to rejig bond portfolio

Though the savings rate has been increased, it&rsquo;s better to keep money invested in higher paying instruments.

Don't keep cash idle in banks

I am 52 years. My wife (48) and my combined monthly income is Rs 1.4 lakh. I don&rsquo;t have any loan outstanding, but have three credit cards (between both of us). We live in a company-provided house, which the company is willing to sell for an upfront payment of Rs 40 lakh. When I approached banks for a loan, they refused despite a clean credit history.

Debt Counselling: Sanjay Agarwal

The primary objective of the Reserve bank of India (RBI) in the policy has been to moderate inflation and anchor inflation expectations, while sustaining growth in the medium term.

Comment: Milind Barve

In its monetary policy statement for 2011-12, the Reserve Bank of India (RBI) raised the repo rate by 50 basis points, a break from the trend of 25-basis point increases since March 2010, owing to the generalisation of inflationary pressures. The repo rate was also designated as the single independent varying policy rate, which would enhance the effectiveness of communicating RBI&rsquo;s monetary stance.

Comment: Naresh Takkar

Government bonds fell, pushing yields to their highest level in almost four months, after the central bank boosted its benchmark lending rate by more than most economists predicted.

Bond yields near four-month high 

India Inc&rsquo;s powerful men appear to have developed a special fondness for big cats. If Mukesh Ambani is fond of the leopard&rsquo;s sharp predatory instincts, Rana Kapoor swears by the cheetah&rsquo;s agility. But the Yes Bank founder and CEO is no copycat, write Shyamal Majumdar and Somasroy Chakraborty.

Lunch with BS: Rana Kapoor

I had accumulated Rs 40,000 on my credit card, which I had repaid, but misplaced the payment receipt. However, I still keep getting reminders from my bank, asking for the payment. I have not used the card ever since and I now wish to discontinue it.

Banking: Prashant Joshi

A bankers&rsquo; committee suggests banks lend to meritorious students without collateral.

Good marks, no collateral

On Tuesday, when the country&rsquo;s largest bank &mdash; State Bank of India (SBI) &mdash; raised lending rates by 75 basis points (bps), many were surprised. The reason: The sharp increase was a major departure from those during former chairman O P Bhatt&rsquo;s regime.

SBI's Catch-up mantra

Even until 10 years ago, Bank of Baroda was seen as a fuddy-duddy public sector bank with a bureaucratic way of functioning. That&rsquo;s when its management decided to give the bank a new identity altogether and position it as a marketing organisation. In this extract from the book Dare To Lead: The Transformation of Bank of Baroda, author Anil K Khandewal, former chairman and managing director of the bank, recounts the passionate and intensive rebranding exercise undertaken to transform the bank&rsquo;s image and perception.

More than a makeover

The rupee dropped to an eight- week low, as concern of Europe&rsquo;s debt crisis worsening bolstered demand for the dollar. India is expected to revise its economic growth target downward, Kaushik Basu, chief economic adviser to the finance ministry, said last week.

Rupee drops to eight-week low 

The bank&rsquo;s profit plummets to Rs 20.8 cr on higher provisioning, FY11 net down 9.84%.

SBI: Growth pangs

Financial Analysis: Find the Latest Financial News Analysis & Research Updates from all top sources for the Indian Finance industry on Business Standard.

Finance News Analysis, Financial Analysis and Research | Business Standard

Find the Latest Financial News Analysis & Research Updates from all top sources for the Indian Finance industry on Business Standard.

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