SBI banking on lower CRR during RBI's Jan 29 review
New Delhi: Government run State Bank of India (SBI) in its latest official communication to the media, has conveyed that they are banking on a 0.5% CRR (Cash Reserve Ratio) cut from the Reserve Bank of India (RBI) during their policy review meet on January 29. SBI has expressed hope that a further cut in the CRR would help boost the sagging growth currently being witnessed in the economy, after the last meeting didnt see any changes to the crucial rates for the country. SBI Chief, Pratip Chaudhuri said, "CRR cut is more important and repo rate cut if it happens will be very useful. 50 basis points repo rate cut would be useful. CRR, I would request for a 50-100 basis points cut."
The RBI is scheduled to announce its 3rd quarter monetary policy review on January 29. The apex bank has hinted that it could go in for an interest rate cut in the review. Chaudhuri further said RBI should allow banks to give 2% interest on current accounts deposits, to attract cash lying in hands of businesses. Chaudhari felt like limited interest levels like 2% shall perhaps make more people deposit their money in the banks, which would bring in a lot of money into the monetory system. As per the current scenario, none of the Banks allow that.
RBI should allow 2 per cent interest on current account deposits: SBI
New Delhi: Ahead of RBI's monetary policy review, SBI today expressed hope the central bank will cut interest rates by 0.5 per cent and cash reserve ratio (CRR) by up to one per cent to boost sagging growth.
"CRR cut is more important and repo rate cut if it happens will be very useful. 50 basis points repo rate cut would be useful. CRR, I would request for a 50-100 basis points cut," State Bank of India (SBI) chairman Pratip Chaudhuri told reporters.
"Only then, the rate of interest environment can come down significantly," he added.
The RBI is scheduled to announce its third quarter monetary policy review on January 29. The Reserve Bank has hinted that it could go in for an interest rate cut in the review.
Mr Chaudhuri further said RBI should allow banks to give two per cent interest on current accounts deposits, to attract cash lying in hands of businesses.
"Reserve Bank should allow some interest...something like two per cent to be paid on current accounts... that will encourage more people to put (money in banks) instead of keeping the money in cash. It (interest rate) will help put the money in current account," he said.
At present, banks do not pay any interest on money kept in current account.
The RBI had last reduced short-term lending (repo) rate in April, 2012 and stands at 8 per cent. In October, the RBI had reduced cash reserve ratio (CRR) -- the portion of deposits banks have to mandatorily park with the central bank - by 25 basis points to 4.25 per cent.
The RBI in mid-quarter policy review on December 18, 2012 said: "In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards," the RBI had said.
Economic growth in the first half of the current fiscal year has declined to 5.4 per cent from 7.3 per cent a year ago and has been estimated to be around 5.7-5.9 per cent in 2012-13.
"CRR cut is more important and repo rate cut if it happens will be very useful. 50 basis points repo rate cut would be useful. CRR, I would request for a 50-100 basis points cut," State Bank of India (SBI) chairman Pratip Chaudhuri told reporters.
"Only then, the rate of interest environment can come down significantly," he added.
The RBI is scheduled to announce its third quarter monetary policy review on January 29. The Reserve Bank has hinted that it could go in for an interest rate cut in the review.
Mr Chaudhuri further said RBI should allow banks to give two per cent interest on current accounts deposits, to attract cash lying in hands of businesses.
"Reserve Bank should allow some interest...something like two per cent to be paid on current accounts... that will encourage more people to put (money in banks) instead of keeping the money in cash. It (interest rate) will help put the money in current account," he said.
At present, banks do not pay any interest on money kept in current account.
The RBI had last reduced short-term lending (repo) rate in April, 2012 and stands at 8 per cent. In October, the RBI had reduced cash reserve ratio (CRR) -- the portion of deposits banks have to mandatorily park with the central bank - by 25 basis points to 4.25 per cent.
The RBI in mid-quarter policy review on December 18, 2012 said: "In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards," the RBI had said.
Economic growth in the first half of the current fiscal year has declined to 5.4 per cent from 7.3 per cent a year ago and has been estimated to be around 5.7-5.9 per cent in 2012-13.
Bankers demand abolition of STT
NEW DELHI, Jan 8, 2013 dhns:
Bankers on Monday demanded abolition of securities transaction tax or imposition of a similar tax on commodity market to prevent money meant to be divested in equity market being diverted to commodity market.
“Much of the money which could have been invested in the stock market is now going into this commodity market. Either you have a commodity transaction tax (CTT) or you abolish the STT,” State Bank of India Chairman Pratip Chaudhuri said after the pre-budget meeting of bank CMDs with Finance Minister P Chidambaram.
The demand from bankers for imposition of STT is quite contrary to the one from India Inc which has asked the government to desist from imposing CTT in the next Budget on concerns of fall in stock exchanges’ turnovers and illegal trading.
In the 2008-09 Budget, Chidambaram had proposed a commodity transaction tax (CTT) of 0.017 per cent. However, the proposal was kept in abeyance following apprehensions aired by then consumer affairs minister Sharad Pawar as well as Prime Minister's Economic Advisory Council Chairman C Rangarajan.
Commodity market players are also opposing any such proposal, saying commodities are already taxed to the tune of almost 12 per cent in the form of mandi tax, VAT, excise, cess, handling costs and warehousing charges before they are placed on the trading platform. Moreover, futures trading also requires security deposits and high initial and special margin requirements.
Bankers sought reduction in lock-in period for tax-saving deposits from five to three years in order to channelise more funds into banking sector. Chaudhuri said some of bankers also suggested allowing banks to issue tax-free infrastructure bonds, treat Urban Cooperative Banks at par with those in rural areas and to exempt social security insurance schemes from service tax.
Chaudhuri, however, expressed strong reservations on imposing restrictions on gold import as it is closely connected to export of gold jewellery. He said, too much of restrictions can hurt gold jewellery export.
RBI Deputy Governor K C Chakrabarty, Indian Overseas Bank CMD M Narendra, UCO Bank CMD Arun Kaul, Punjab National Bank CMD K R Kamath, ICICI Bank MD Chanda Kochhar, Axis Bank MD Shikha Sharma and Chairman of HDFC Ltd Deepak Parekh attended the pre-budget meeting.
“Much of the money which could have been invested in the stock market is now going into this commodity market. Either you have a commodity transaction tax (CTT) or you abolish the STT,” State Bank of India Chairman Pratip Chaudhuri said after the pre-budget meeting of bank CMDs with Finance Minister P Chidambaram.
The demand from bankers for imposition of STT is quite contrary to the one from India Inc which has asked the government to desist from imposing CTT in the next Budget on concerns of fall in stock exchanges’ turnovers and illegal trading.
In the 2008-09 Budget, Chidambaram had proposed a commodity transaction tax (CTT) of 0.017 per cent. However, the proposal was kept in abeyance following apprehensions aired by then consumer affairs minister Sharad Pawar as well as Prime Minister's Economic Advisory Council Chairman C Rangarajan.
Commodity market players are also opposing any such proposal, saying commodities are already taxed to the tune of almost 12 per cent in the form of mandi tax, VAT, excise, cess, handling costs and warehousing charges before they are placed on the trading platform. Moreover, futures trading also requires security deposits and high initial and special margin requirements.
Bankers sought reduction in lock-in period for tax-saving deposits from five to three years in order to channelise more funds into banking sector. Chaudhuri said some of bankers also suggested allowing banks to issue tax-free infrastructure bonds, treat Urban Cooperative Banks at par with those in rural areas and to exempt social security insurance schemes from service tax.
Chaudhuri, however, expressed strong reservations on imposing restrictions on gold import as it is closely connected to export of gold jewellery. He said, too much of restrictions can hurt gold jewellery export.
RBI Deputy Governor K C Chakrabarty, Indian Overseas Bank CMD M Narendra, UCO Bank CMD Arun Kaul, Punjab National Bank CMD K R Kamath, ICICI Bank MD Chanda Kochhar, Axis Bank MD Shikha Sharma and Chairman of HDFC Ltd Deepak Parekh attended the pre-budget meeting.
http://timesofindia.indiatimes.com/business/india-business/Banking-ombudsmen-see-surge-in-plaints/articleshow/17919633.cms
These demands appear to be weird, ie. reducing of CRR further, which work like CUSHIONS to banks and it should not be made to go down further. Moreover the demand to give interest to current account holders is to benefit corporate account holders and defies all logic.
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