India’s central banking institution the Reserve Bank of India has reduced the weight-age on home loans above 75 lacs from 75 per cent to 50 per cent lately. RBI has taken this initiative to support banks for disbursing more volume of home loans for home buying in the big business cities.
In its monetary policy RBI cites that residential property sale holds a central position through its forward and backward connection with country’s economy. It has been fixed on as a counter cyclical measure to cut down risk weigh on verified categories. Standard asset provisioning on such loans will also be declined accordingly.
RBI adhere the REPO rate at 6.25% and the Reverse Repo rate at 6% in its monetary policy review. The Marginal Standing Facility (MSF) – an emergency funding facility will stay in at 6.5% as also the Cash Reserve Ratio (CRR) of 4%.
An additional move that will alleviate the liquidity in banking system by close to Rs 50,000 crore, RBI has lowered the Statutory Liquidity Ratio (SLR) – the decree for least possible holding of government securities. Previously banks used to invest 20.5% of their deposits in gilts; which will now be replaced by 20% and it will be effective from June 24, 2017. This reduction decision has been made on the fact of allowing banks coadjute with the intercontinental norms on liquidity coverage that will be proclaimed January 2019 onwards.
Before this revelation it was apprehended that RBI will make delay in disclosing the rates. Industry experts expect that RBI will relax their standpoint from’ neutral’ to ‘accommodative’ to convey that easy money condition would conquer. Meanwhile petrol prices have been jumped up again across the country since the inflation numbers were made public and chances are it will ascend further. However, RBI continued to stick with the neutral stance on the ground the easing of price of commodities for short term period.
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