Experts are of the opinion that the banks will be able to transmit the rate cuts more effectively now
The governor said will monitor developments on the commodity prices, including food and oil and external developments in its future policy formulations
As per the RBI guidelines, there will be provision for premature withdrawal subject to a minimum lock-in period and penalty to be determined by individual banks
The situation is a tad similar to what happened when the erstwhile Soviet Union was just coming out of communism.
The question we can really ask is whether we are barking up the wrong tree by just looking at one component i.e. interest rates, which accounts for just between 2-3 percent of overall costs?
The move is on expected lines
Going by the draft, under the GMS, an individual or entity can walk into a test centre and gets the gold melted, purity assessed and converted into bars, against which the bank will issue a certificate to the holder.
We track the latest developments at the RBI policy meet today.
Most economists expect Rajan to cut repo rate, the rate at which it lends short-term funds to banks
Commercial banks blame the central bank's tight grip on liquidity for keeping the cost of funds high, a claim Governor Raghuram Rajan dismissed as "nonsense" at the April policy review.
Mix of slowing inflation and a weaker-than-expected growth is building the case for a softer policy.
The government is trying to convince households, who sometimes have little faith in financial institutions, to break the tradition and hand over gold passed down the generations.
More than the worries related to upside risks on inflation, the central bank, at this stage, appears to be more concerned on the lack of monetary transmission
While a section of economists expect the RBI to cut rates today to support growth, others forecast the central bank to take a pause in view of the risk factors to inflation
Factors that prevented banks from lowering their loan rates have remained quite strong. These include piling up of bad and restructured loans, weak earnings growth and poor capital position of state-run banks.
In an early morning press release the central banks said that the "softer readings on inflation are expected to come in through the first half of 2015-16 before firming up to below 6 per cent in the second half.
Indian economy is expected to clock 7.7% growth under the new series, higher than 6.3 percent projected under the older series, says Standard Chartered.
Here's the full text of the RBI statement made after it reduced the repo rate by 25 basis points