In­dian banks breathe a sigh of re­lief

The Pak Banker - - Front Page -

NEW DELHI: Banks were re­lieved to see that in­fla­tion data re­leased Tues­day for the month of Novem­ber de­liv­ered no nasty sur­prises.

The whole­sale price in­dex of in­fla­tion rose 7.48% in Novem­ber from the same pe­riod a year ear­lier, slow­ing down from Oc­to­ber's pro­vi­sional 8.58% growth. A Dow Jones poll of 17 econ­o­mists had fore­cast that in­fla­tion would grow at 7.5% in Novem­ber.

With in­fla­tion com­ing in line with es­ti­mates, chances that the Re­serve Bank of In­dia will in­crease pol­icy rates in its Thurs­day re­view have be­come rather slim. The news cheered in­vestors. The Bom­bay Stock Ex­change Bank­ing In­dex turned pos­i­tive when the in­fla­tion data was re­leased at 0600 GMT and by mid-day, it was up 0.4%. Shares of the State Bank of In­dia were up 0.9% at 2,770.9 ru­pees ($61.58). HDFC Bank gained 0.6% to 2253.05 ru­pees. The 30-stock bench­mark in­dex, or Sen­sex, which had been choppy in trade so far, now is trad­ing up 0.5%.

The biggest neme­sis of In­dia's cen­tral bank re­mains con­tain­ing in­fla­tion. The Re­serve Bank of In­dia is likely to con­tinue to sound vig­i­lant on in­fla­tion even though it is ex­pected to pause its rate tight­en­ing moves at its pol­icy re­view Thurs­day, said Anubhuti Sahay, an econ­o­mist at Stan­dard Char­tered Bank. Banks have enough on their plate with­out hav­ing to worry about an in­crease in pol­icy rates, a move ex­pected to make funds more ex­pen­sive. Their biggest prob­lem is slug­gish de­posit growth and the ac­com­pa­ny­ing short­age in liq­uid­ity. Ac­cord­ing to the cen­tral bank, credit growth stood at 22.7% on Nov. 19 from a year ear­lier, while de­posit growth was muted at 15.8%. Many ex­pect that the in­crease in lend­ing rates which is cur­rently un­der­way will help banks off­set the de­posit cost in­crease. -PB News

IS­LAM­ABAD: Dr. Rushdi Mah­mood Rasheed, Am­bas­sador of Iraq pre­sent­ing a cheque of US $ 10 mil­lion to PM Syed Yusuf Raza Gi­lani for the flood af­fectees at PM House. -App

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