Skip to main content

RBI might announce liquidity tightening steps

By
In the third bi- monthly monetary policy review to be announced next month, the Reserve Bank of India ( RBI) might announce liquidity tightening steps like longer tenure term reverse repos as the central bank had always wanted call money rates to hug the repo rate, while in recent times on certain occasions it has fallen much below the repo rate.
The repo rate or the rate at which banks borrow from the central bank currently stands at 7.25 per cent while call money rates had on certain days moved even below the 7per cent mark. For example on July 21, the weighted average call money rate had dived to 6.84 per cent.
“I would expect RBI to reiterate that they would like to see overnight rates closer to the repo rate. RBI will continue to do more of term reverse repos and in the monetary policy they may announce that they would decide to do term reverse repos of longer tenure,” said S Prabhu, head of fixed income at IDBI Federal Life Insurance. Prabhu added the central bank might also decide to revive the market stabilisation scheme if the liquidity becomes humongous. “Under this, they can issue additional treasury bills or shorter tenure government bonds to suck out liquidity,” said Prabhu. Term reverse repos were introduced by RBI in June 2014 and so far it has ranged in the tenure of four- five days. These are used to suck out liquidity from the system and the last term reverse repo auction was done in January 2015 and it was of a five- day tenure.
“RBI may announce longer term reverse repos of up to 28 days in the monetary policy review. The other possibilities are that they may continue to go for more open market operation sale or auction of cash management bills. The comfortable liquidity has been because government had spent quite a bit, there have been bond redemptions and RBI had intervened in the foreign exchange market through the spot route,” said Dwijendra Srivastava, chief investment officer ( debt) at Sundaram Mutual Fund. Earlier this month, due to ample liquidity in the system, the central bank had conducted OMO sale of government bonds for a notified amount of  Rs.10,000 crore but ultimately Rs.8,270 crore was sucked out of the system. RBI’s liquidity tightening stance had stumped the Street as a result of which bond yields had risen.
RBI likely to keep repo rate unchanged DBS
The Reserve Bank of India is likely to keep the benchmark repo rate unchanged at 7.25 per cent in its policy review meet next week, a DBS report says. According to the global financial services firm, besides the impact on markets, the Central Bank would take cues from the US Federal Reserve this week for its rate trajectory. According to DBS, besides the P- Notes issue, other domestic factor weighing on market is the unproductive monsoon parliament session, which began last week.
Business Standard, New Delhi, 29th July 2015

Comments

Post a Comment

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

By
  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6
Post a Comment
Read more

Jaitley plans to cut MSME tax rate to 25%

By
Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem
1 comment
Read more

Don't forget to verify your income tax return in August: Here's the process

By
  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s
Post a Comment
Read more