excess liquidity

Interest rates may remain soft even if the central bank were to withdraw its accommodating stance and tighten monetary policy, which will be reviewed on Friday. The good news for home loan borrowers is that retail loans are the only form of credit showing some decent growth and bankers are unlikely to jeopardise this demand by raising rates. Corporates, who in any case have not been big borrowers, may also not see an increase in rates as banks have said they are unlikely.. Full Article

Relaxation in the norms relating to infrastructure lending and 70 per cent loan loss coverage ratio are likely to top the agenda when bankers meet Reserve Bank of India on January 14, ahead of the quarterly policy review. "Banks will press their demand to relax the norms on infrastructure lending. They may also ask for some easing in the guidelines announced for banks to augment their loan loss coverage ratio to 70 per cent," Indian Banks' Association chief executive, K .. Full Article

A hawkish Reserve Bank of India (RBI), while staying away from hiking key rates like repo or reverse repo, hiked the statutory liquidity ratio (SLR) to 25% from 24%. The cash reserve ratio (CRR), the minimum amount banks need to park with the RBI, was also left unchanged. Full Article

Oil prices are a barometer of the world economy. Rising prices between 2003 and 2007 reflected the best global economic growth in a generation. This high economic growth was brought to an end not only by underpricing of risk, excess liquidity and over-confidence but also by an increasingly unsustainable commodity boom – of which oil was a crucial part. Now, as the world has dropped into recession, oil prices have fallen by more than half. Full Article