The BSE Bankex increased 0.29% at 13:19 IST. Bank of Baroda, Bank of India, Canara Bank, Punjab National Bank, IDBI Bank, State Bank of India, Indian Overseas Bank, HDFC Bank, ING Vysya Bank and Vijaya Bank rushed high.
Inflation dipped for the 4th successive week. Wholesale price index inflation fell 1.55% in the current year to 27th June opposed to the earlier week’s yearly fall of 1.3%, government data revealed on Thursday. The yearly inflation pace was 12.03% during the equivalent week of last year.
With inflation floating near its lowest standard since 1977-78 analysts opine the RBI bank is likely to reduce interest costs further to enhance sluggish financial system. The central bank has reduced its chief temporary lending rate or repo rate by 400 basis points to 5% in 5 moves since October of last year. Lower rate of interest will enhance lending and thus inspire drooping demand. The RBI credit policy is planned on 28th July.
Interest rates are decreasing due to plenty of liquidity in the banking structure, low headline inflation that has now dropped into pessimistic zone in the week closed 6th June and a loose financial policy stance of the RBI.
The government did not declare any pacifiers for the banking division in the Union Budget 2009-2010. Banks were hoping to receive tax respite on interest gained on infrastructure lending in the budget.