Bonds: Bond prices went up for the second day in a row following the announcement of the monetary policy. Prices went up by about 15-25 paise.

G-Secs: The 7.37-9 year-2014 paper closed at Rs102.56 (6.96 per cent YTM), higher than Tuesday's level of closed at Rs102.47 (6.98 per cent YTM). The 10.25 per cent - 16 year- 2021 paper closed at Rs125.66 (7.44 per cent YTM), higher than the previous close of Rs125.53 (7.45 per cent YTM).

Call rates: Call rates opened at 5.25 per cent following the 25 bps hike in reverse repo and repo rates. It traded between 5.25-5.30 per cent during the day (5.25 per cent).

Reverse Repo: In the one-day reverse repo, under the liquidity adjustment facility, the RBI received and accepted 37 bids amounting to Rs19,205 crore.

CBLO: In the CBLO market, there were 309 trades for Rs13,787 crore in the rate range of 4.15-5.25 per cent.

26 October 2005

Rupee recovers; bond prices rise
Mumbai: The rupee appreciated against the dollar on Tuesday, in tandem with a rise in the euro and the domestic hike in key interest rates. The rupee closed at 45.06/07, up from Monday's 45.16/17.

According to dealers the quarter percentage hike in the repo and reverse repo rate is perceived to be in favour of the rupee, and was in line with market expectations.

Forward market: The 12-month premium closed at 0.51 per cent (0.49) and the six-month at 0.56 per cent (0.5).

G-Secs: The 7.37-9 year-2014 paper closed at Rs102.47 (6.98 per cent YTM), up from Monday's Rs102.38 (6.99 per cent YTM). The 10.25 per cent-16 year- 2021 paper closed at Rs125.53 (7.45 per cent YTM), higher than Monday's close at Rs125.41 (7.46 per cent YTM). The 7.38 per cent-10 year-2015 benchmark paper was dealt at Rs102.10 (7.08 per cent YTM), 15 paise higher than Monday's Rs101.95 (7.099 per cent YTM).

Call rate: The inter bank rates closed at 5.25 per cent (5-5.05) in anticipation of higher rates on Wednesday.

Reverse repo: In the one-day auction under the liquidity adjustment facility, RBI received and accepted 24 bids amounting to Rs12,215 crore.

CBLO: In the CBLO market, there were 314 trades for Rs12,891.20 crore in the rate range of 5-5.25 per cent.

RBI hikes reverse repo rate - leaves bank, CRR rate unchanged
Mumbai: The Reserve Bank of India left the short-term interest rate unchanged to ward off price pressures, and increased its growth forecast for one of the world's fastest expanding economies.

However, the RBI lifted its reverse repo rate, used to drain liquidity from the money market, by a quarter of a percentage point to 5.25 percent.

Analysts said there would be more rate increases early in 2006.

Tuesday's widely expected rate rise takes the reverse repo to its highest in 2-½ years. It last raised the rate, by a quarter of a percentage point, in April.

The cash reserve ratio (CRR) was also kept unchanged at five per cent. Accordingly, the fixed repo rate under Liquidity Adjustment Facility (LAF) would be 6.25 per cent with effect from October 26, 2005.

25 October 2005

Rupee weakens - bonds up
Mumbai: The rupee slipped against the dollar on Monday, closing at 45.16/17. On Friday, the rupee had closed at 45.06/07.

Forwards: In the forward premia market, the 6-month premium closed at 0.58 per cent (0.5) and the 12-month premium ended at 0.51 per cent (0.49).

G-Secs: The 7.37-9 year-2014 paper closed at Rs102.38 (6.99 per cent YTM), higher than Friday's close at Rs102.275 (7 per cent YTM). The 10.25 per cent -16 year-2021 paper closed at the same level. On Friday, it had closed at Rs125.42 (7.46 per cent YTM). The 7.38-10 year-2015 paper was dealt at Rs101.95 (7.099 per cent YTM).

Call rate: The call rate closed at 5-5.05 per cent (5-5.05).

Reverse Repo: In the one-day reverse repo, under the LAF, RBI received and accepted 29 bids amounting to Rs14,275 crore.

CBLO: In the CBLO market, there were 274 trades for Rs14,415.90 crore in the rate range of 4.98-5.30 per cent.

No-frills account: RBI to the rescue of common man
Fed up of the umpteen regulations thrust on you by banks when you want to open an account? Burdened by the stipulation of high minimum balance conditionality? Wait, the Reserve Bank of India has stepped in bring you a level the playing field for customers.

In its mid-term review of annual policy statement for the year 2005-06 (popularly referred to as the credit policy), released today, the Reserve Bank of India has called upon banks to come out with a 'no frills' account - accounts with no pre-conditions, so that the common man would not hesitate to have a bank account.

RBI had earlier indicated its thinking on the subject in its April annual policy statement this year. The April statement, then, had expressed concerns about banking practices that tend to exclude a sizeable section of the population from the country's banking system. The mid-term review announced earlier today tends to correct this exclusion by giving a directional programme to bankers.

Revealing the policy statement, Dr Y Venugopal Reddy, governor, RBI, stated, "With a view to achieving greater financial inclusion, all banks needed to make available a basic banking 'no frills' account either with 'nil' or very low minimum balances as well as charges that would make such accounts accessible to vast sections of population."

Currently, banks require an opening balance of between Rs1,000 and Rs5,000 for a savings bank account with them. The current direction from the Reserve Bank should do away with this stipulation or to expect the least, bring it to very nominal levels.

Few banks had earlier come out with attractive propositions like 'zero balance' accounts. But, just as a catchy advertisement tends to cover more than it reveals, zero balance accounts also concealed more than they revealed.

Had one opted for a zero balance account, one would have been shocked later to discover that the fine print stipulates that the zero balance facility is available only at the time of opening the account - a fact not revealed to the unsuspecting account-holder. Once the account becomes operational, say as and when credit is made into the account, the minimum balance stipulation automatically comes into force.

From then onwards, whenever the balance in the account drops below the bank's stipulated minimum balance, a penal charge known as "minimum balance charge" is levied on the hapless account-holder. These penal charges are levied either on a daily basis or consolidated in to a monthly or quarterly charge.

The recent credit policy hopes to end such gimmicks; it advises bankers to devise a no-frills' account and has also advised the banks to "give wide publicity to the facility of such a 'no-frills' account so as to ensure greater financial inclusion" of the vast sections of the population.

RBI wants govt pass on high oil prices to market
Mumbai: The Reserve Bank of India has warned again that if the government does not pass on the increase in international oil prices to the domestic market, it will pose a significant risk to the country's fiscal situation.

The RBI said in its mid-term review, Macro-economic and Monetary Developments, released a day before the bank's mid-year policy review, said that the hike in international oil prices and the possibility that they may remain high longer than anticipated, poses significant risk to the fiscal deficit, directly or indirectly, unless appropriately passed on.

In its annual report the RBI had cautioned the Government if domestic oil prices are not allowed to keep pace with the international price, the fiscal burden of the Government could increase and also hurt investors of public sector oil companies.

(See: Macroeconomic and Monetary Developments Mid-Term Review 2005-06)