RBI returns to normalcy, and a single instrument
In the absence of guidance on inflation, credit growth and money supply, Street expects reactionary policy steps ahead
Inflation-wary central bank raises repo rate 25 bps; but cuts MSF rate in equal measure to allow extra liquidity; bankers ambivalent on future course but stock markets relieved
Banks might hold on to lending rates for the time being
Says industry is already grappling with very high interest rates
Decides to implement recommendations of FSLRC which deal with consumer protection, capacity building
RBI hiked repo rate by 25 basis points or 0.25 percent to 7.75 percent
In the absence of any guidance on inflation, credit growth and money supply, market expects future policy action to be reactionary
There are 26 applicants for new bank licences
This simply means quantum of credit percolating to state economy has been increasing relative to increase in banks' deposits
In past, FinMin openly expressed displeasure over repo rate increase or status quo maintained by then RBI governor D Subbarao
The central bank cut FY14 GDP forecast to 5% from 5.5%
Experts say MSF rate will also remain in focus
RBI cuts MSF rate by 25 bps
MFI-NBFCs want dual rules under the proposed bill to regulate microfinance companies
It is widely expected that the central bank will restore the 100 bps corridor between the repo and the MSF rate on Tuesday
Industrial Outlook Survey reflected weak business sentiment and further moderation expected ahead
Fail to address economic credit challenges; Benefits to last for short period