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RBI Increases Lending rates by 2%

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RBI Increases Lending rates by 2%

Last updated: July 16 2013
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  • RBI Increases Lending rates by 2%

    Sensex tanks 368 points; bank stocks plunge


    Sensex falls on profit-taking; Infosys, banks hit
    The wide-based National Stock Exchange index, Nifty dipped below the 5,800 level by falling 101.95 points, or 1.69 per cent to, 5,928.85.
    Reuters | Jul 16, 2013, 10.05AM IST
    MUMBAI: The BSE benchmark Sensex on Tuesday plunged over 368 points in early trade, snapping its three- session rising streak, pulled down by financial sector stocks, including ICICI Bank and HDFC, after the RBI raised lending rates for banks.

    The 30-share barometer slipped below the 20,000 points level by tumbling 368.91 points, or 1.84 per cent, to 19,665.57 with all the sectoral indices led by banking and realty, trading in red with losses up to 4.83 per cent. The index had gained over 741 points in the past three sessions.

    The wide-based National Stock Exchange index, Nifty dipped below the 5,800 level by falling 101.95 points, or 1.69 per cent to, 5,928.85.


    Brokers said fresh spell of selling by participants after the RBI last night came out with a slew of measures, including hiking the lending rates for banks and sucking up Rs 12,000 crore to stem the rupee volatility, dampened the trading sentiment.

    Under the measures announced, RBI raised lending rates to commercial banks 2 per cent to 10.25 per cent making the loans costlier.

    They said, however, a firming trend in the Asian region following overnight gains on the US market, capped the losses on the domestic equity market.

    The BSE banking index suffered the most by falling 4.83 per cent to 12,822.37 as stocks of SBI fell by 5.07 per cent to Rs 1,819, ICICI Bank by 5.25 per cent to Rs 1,007, HDFC Bank by 2.63 per cent to Rs 676.90 and Yes Bank by 8.21 per cent to Rs 459.40.

    In the Asian region, Hong Kong's Hang Seng index traded higher by 0.14 per cent, while Japan's Nikkei Index up 0.61 per cent, in early trade.

    The US Dow Jones Industrial Average ended 0.13 per cent higher in Monday's trade.
  • #2

    #2

    Re : RBI Increases Lending rates by 2%

    ye sarkar akhir chahti kya hai

    we are completely dropping the idea of buying our own home. Rent ke makaan hi sahi hai kam se kam insan ki tarah to reh sakte hai

    Comment

    • #3

      #3

      Re : RBI Increases Lending rates by 2%

      The short term measures may help with INR becoming scare and hence holding up against the USD. As also the inflation should hold up at current levels till medium term stabilisation is not in place.

      The high interest rate regime is never a fruitful one - not for companies, not for individuals like us.

      Comment

      • #4

        #4

        Re : RBI Increases Lending rates by 2%

        Originally posted by Pramila View Post
        ye sarkar akhir chahti kya hai

        we are completely dropping the idea of buying our own home. Rent ke makaan hi sahi hai kam se kam insan ki tarah to reh sakte hai
        More so I heard in a new channel this week - if the existing goverment comes back in 2014, there may not be much to expect from an improvement perspective - the reason stated was that if there were options why would the govt not have exercised them now.

        Comment

        • #5

          #5

          Re : RBI Increases Lending rates by 2%

          Originally posted by Pramila View Post
          ye sarkar akhir chahti kya hai

          we are completely dropping the idea of buying our own home. Rent ke makaan hi sahi hai kam se kam insan ki tarah to reh sakte hai
          Pramila,
          Look at the other side of the things. The situation is getting scarier for investors, Anyone (builder or individual) who is leveraged or are holding inventories by taking loans will be looking at -ve returns compared to the bonds/FD returns from now on. The situation is getting interesting. On the individual front, this move is not going to affect the rates of individual home loans now.
          Already, all the builders are in hurry to send demand notes to all its investors. Now they should just forget getting any new money from the Banks. very soon they have to find new ways to get some money.
          Buy 1 Get 1 might just be coming for the tuchha builders

          Comment

          • #6

            #6

            Re : RBI Increases Lending rates by 2%

            all the real estate companies, banks, financing & infrastructure companies going down

            Top Losers BSE | NSE Last updated: 16 Jul, 12:33
            Company Group Prev Close (Rs) Current Price (Rs) % Change
            Indiabulls Real Esta A 74.95 68.65 -8.41
            YES Bank Ltd. A 500.50 458.50 -8.39
            Oriental Bank of A 201.20 185.80 -7.65
            DLF Ltd. A 178.45 164.95 -7.57
            Power Finance Co A 147.25 136.50 -7.30
            IDFC L A 137.90 127.90 -7.25
            Canara Bank A 361.10 335.00 -7.23
            IndusInd Bank A 506.75 471.50 -6.96
            UCO Bank A 69.70 64.90 -6.89
            JaiprakashAssociates A 54.60 51.05 -6.50
            LIC Housing Fi A 237.65 222.45 -6.40
            IRB Infrastructure D A 104.85 98.50 -6.06
            Oberoi Realty A 217.65 204.80 -5.90
            HDIL A 42.20 39.80 -5.69
            ICICI Bank A 1,062.85 1,004.70 -5.47
            Axis Bank Ltd. A 1,309.40 1,239.35 -5.35
            Punj. NationlBak A 661.80 627.15 -5.24
            Union Bank of In A 180.30 171.00 -5.16
            Dena Bank A 71.40 67.85 -4.97
            Unitech Ltd. A 21.30 20.25 -4.93
            M&M Fin.Services A 281.75 268.00 -4.88
            Syndicate Bank A 119.25 113.45 -4.86
            Kotak Mahindra Bank A 757.80 722.00 -4.72
            IDBI Bank Ltd. A 74.70 71.20 -4.69
            SBI A 1,916.10 1,828.00 -4.60
            Sobha Developers Ltd A 353.60 337.35 -4.60
            Jaypee Infratech Ltd A 25.85 24.70 -4.45
            Bank of Baroda A 590.55 564.35 -4.44
            Karnataka Bank A 112.65 107.75 -4.35
            Indian Overseas A 50.60 48.40 -4.35
            Bank of India A 231.80 222.05 -4.21
            Allahabad Bank A 92.15 88.35 -4.12
            HDFC A 849.40 814.80 -4.07
            Corporation Bank A 343.80 330.00 -4.01
            Andhra Bank A 82.55 79.35 -3.88
            IFCI Ltd. A 26.60 25.60 -3.76
            L & T A 1,005.85 970.85 -3.48
            Central Bank A 64.10 61.90 -3.43
            Reliance Capital A 386.95 373.70 -3.42

            Comment

            • #7

              #7

              Re : RBI Increases Lending rates by 2%

              le lee hai iss govt ne middle class aur garibon keee........i think overall property market will face very tough time till election next year and if congress comes back in power or weak coailation then samjho mar gayee.

              Comment

              • #8

                #8

                Re : RBI Increases Lending rates by 2%

                Originally posted by ashish18 View Post
                Pramila,
                Look at the other side of the things. The situation is getting scarier for investors, Anyone (builder or individual) who is leveraged or are holding inventories by taking loans will be looking at -ve returns compared to the bonds/FD returns from now on. The situation is getting interesting. On the individual front, this move is not going to affect the rates of individual home loans now.
                Already, all the builders are in hurry to send demand notes to all its investors. Now they should just forget getting any new money from the Banks. very soon they have to find new ways to get some money.
                Buy 1 Get 1 might just be coming for the tuchha builders
                what are you saying ? HOME LOAN RATES ARE GOING TO BE INCREASED BY 2-3%.

                How it will not effect individual home loans ? can u explain.

                Comment

                • #9

                  #9

                  Re : RBI Increases Lending rates by 2%

                  Originally posted by Pramila View Post
                  what are you saying ? HOME LOAN RATES ARE GOING TO BE INCREASED BY 2-3%.

                  How it will not effect individual home loans ? can u explain.
                  Borrowing will become costlier and so will home loans - as the borrowing for banks will be costlier and also the expectation is that the FD rates will also go up.

                  If anyone has funds in hand then probably the next two months could be good bargaining with builders for buys - need to see how this pans out.

                  Comment

                  • #10

                    #10

                    Re : RBI Increases Lending rates by 2%

                    Originally posted by Pramila View Post
                    what are you saying ? HOME LOAN RATES ARE GOING TO BE INCREASED BY 2-3%.

                    How it will not effect individual home loans ? can u explain.
                    These are not policy rates. The rates increased are more to curb liquidity right now than to effect any increase in lending rate. Although it does signal that we are not far from a 0.25% rate hikes, which will effect your home loan rates.
                    Right now its LAF and MSF, which immediately reduces the ability of these banks to access money. The first impact of these policies will be felt mostly on bigger institutions and riskier assets.

                    From Moneycontrol :
                    Measure One:

                    The central bank restricted banks' borrowing through liquidity adjustment facility (or a window to borrow funds from RBI called LAF) to the tune of 1 percent of total deposits or Rs 75,000 crore. It will be effective from July 17 when onwards, banks have to look for other options to meet their overnight fund requirements if the level reach the stipulated mark.

                    LAF is the combination of two auction routes: repo and reverse repo. While banks borrow from repo currently at 7.25 percent, they park their excess liquidity via reverse repo rate at 6.25 percent.

                    Measure Two:

                    Accordingly, RBI raised the interest rate of Marginal Standing Facility (MSF) by 100 bps to 10.25 percent as against 9.25 percent currently. Hence, the difference between repo rate and MSF stands at 300 basis points compared with 200 bps currently. Banks can borrow money pledging their excess SLR (Statutory Liquidity Ratio) bonds. Most of the banks are holding excess SLR above 23 percent. Hence, lenders can borrow money using MSF route.

                    Comment

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