The Reserve Bank of India is considering cutting the held-to-maturity (HTM) ceiling, Deputy Governor Anand Sinha said on Wednesday, referring to a category of debt that banks must hold until redemption but which can be reshuffled once a year. The limit is currently set at 25 percent, but traditionally has been aligned with the banks' statutory liquidity ratio - or the minimum investments in government bond and other approved securities - which was cut by 1 percent point to 23 percent in July and implemented in August. Sinha said the RBI was looking into a recommendation from a central bank committee to cut the HTM ceiling. The RBI had mentioned in its monetary policy review report on Tuesday it was consulting stakeholders about the proposal.
CRR cut unlikely to be preferred in December, says Subbarao
The cash reserve ratio (CRR) cannot be presumed to be the preferred tool to address liquidity tightness in December, the Reserve Bank of India governor D Subbarao said on Wednesday. He was speaking to analysts a day after cutting the CRR, or the share of deposits banks must maintain with the central bank in cash, by 25 basis points to 4.25%.
Pressure on liquidity to persist, says RBI governor
The pressure on banking system liquidity is likely to persist for a few more months, Reserve Bank of India governor D Subbarao said on Wednesday. Subbarao added the cut in the share of deposits lenders must keep with RBI would spur a reduction in lending rates in the banking sector.
Assessing inflation has turned more uncertain, says Gokarn
Assessing inflation has become more uncertain, Reserve Bank of India deputy governor Subir Gokarn said on Wednesday, a day after RBI left interest rates on hold, but cut the cash reserve ratio for banks. On Tuesday, RBI said it expects inflation, which hit a 10-month high of 7.8% in September to rise before easing in the final quarter of the fiscal year.