Rate cut by Reserve Bank next week a near certainty

Rate cut by Reserve Bank next week a near certainty

Reserve bank of India directly moves to soak up liquidity from banks, hike in the cash reserve ratio (CRR) and how it would stabilise markets. These men know that a dip in growth and surge in deposits would force the central bank to lower interest rates sooner than later, pushes up bond rates and soften bond yields.

“A rate cut now is not conflict with cash reserve ratio (CRR) hike since this hike will be ultimately rolled back. The economy is at a stop now, so we should expect a cut. We were always expecting a 25-basis-point (bps) cut in December and another 25 bps later in the monetary, and we are sticking to our prediction” said Indranil Sengupta, chief India economist at Bank of America-Merrill Lynch (BofA-ML). It expects a total of 75 bps cut by September 2017.
Most economists believe a 25-bps rate cut to be a certainty next week as the central bank needs to support small and medium enterprises (SMEs) which have been hit by demonetisation of high-value notes.

CRR Hike an Incredible steps

The CRR hike announced a few days prior was just an extraordinary liquidity-absorbing measure rather than policy rate decision.

There is a widely shared perception that RBI may turn to more sophisticated policy tools to wipe up liquidity rather than impounding incremental deposits as CRR. Despite the fact that many may be hoping for a more aggressive rate cut by RBI in Wednesday’s monetary policy, chances are that the central bank may hold back ammunition for the future as the full impact of demonetisation unfolds by end March.

On 26 November, RBI asked banks to keep all incremental deposits garnered between September 16 and November 11 with the central bank to absorb the avalanche of liquidity in the banking sector after demonetisation was announced on November 8. RBI will survey these measures on 9 December.
Bond yields, which shot up 17-18 basis points soon after the CRR hike, have fallen almost 10 basis points since then.

December 2, 2016 / by / in , , , , , , ,
Centre approves Real Estate Act rules for Delhi finalised

The urban development minister Venkaiah Naidu approved the final rules to implement the Real Estate Regulatory Act (RERA) for Delhi. This rule has entitled Udai Pratap Singh, the vice-chairman of Delhi Development Authority (DDA), as the interim regulator who will undertake preparatory actions like setting up the website and putting in place the required institutional mechanisms.

The rules, which will be notified by the November 27th, are same as notified by the ministry of housing and urban poverty alleviation (HUPA) on last month October 31.

The act aims for the formation of Regulatory authorities to undertake third party quality audit of real estate projects to ensure quality of construction and services.

The Delhi Real Estate Regulatory Authority (RERA) rules will mandate the publication litigation details by the builders about only those cases which have been prepared of by the concerned court in the past five years. These litigation details published on the RERA website.

Union Urban development minister M Venkaiah Naidu approved these rules, which were formulated after consulting the state government, DDA, New Delhi Municipal Council and other stakeholders. As per the rules, the builder-buyer agreement for sale can now include other elements or features, such as garage and parking.

This has been considered since a promoter may not have complete information about various cases filed, while providing the information to regulatory authorities.

December 2, 2016 / by / in , , , ,