RBI keeps CRR, Repo, Reverse Repo rate unchanged

RBI keeps CRR, Repo, Reverse Repo rate unchanged; Real estate provision up from 0.4% to 1%; SLR hiked to 25% from 24%; Loans to real estate cos becomes expensive; Inflation for March 31, 2010 has been upped to 6.5% from 5%

In its Credit Policy, Reserve Bank of India (RBI) has left CRR, Repo, Reverse Repo unchanged while SLR has been hiked by 100 bps. Reverse Repo has been left unchanged at 3.25%, Repo Rate has been left unchanged at 4.75%. SLR has been hiked to 25% from 24%. However, the hike in SLR will not impact the liquidity.

Inflation for March 31, 2010 has been upped to 6.5% from 5%. FY10 GDP forecast has been kept unchanged at 6% with upward bias.

RBI in its policy said that modest decline is seen in agriculture. There is an evidence of excess liquidity feeding into asset prices. FY10 money supply growth projection has been lowered to 17%. Real Estate provision has been hiked to 1% from 0.4%. NPA norms for banks have been tightened. FY10 credit growth projection has been cut to 18% from 20%.

HDIL says company have to up prices to nullify RBI hike in provisioning. The affordable housing will be impacted the most. RBI stance will affect realty projects under consideration.

CNBC-TV18 Analysis: Banks may need higher provisioning over next 4 quarters. SBI, ICICI currently have 50% coverage ratio. SBI may require additional provisioning of Rs 3,800 Cr. ICICI may require additional provisioning of Rs 1600 Cr.

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