RBI incentivize small savers with higher rate of interest

 Monetary Policies are made in India keeping the interest of small savers.Fixed deposit schemes in banks were treating big deposits, typically corporate or HNI deposits, differentially. Fixed depositors earn differential rates of interest based on the size of deposit. Deposits above Rs 1 crore earn a higher rate of interest. Additionally deposits up to Rs 1 crore can be withdrawn prematurely, resulting in asset-liability (ALM) mismatch. To correct this anomaly, the RBI has allowed banks to offer deposit schemes up to Rs 1 crore which cannot be broken prematurely. There are so-called non-callable deposits which would attract different (higher) rates of interest. Since the money would remain with the bank for a fixed and longer tenure it would avoid AM mismatches. This opens the prospect of retail depositors, who opt for such deposits, to earn a slightly better rate of interest than on a callable deposit. We believe schemes like this will go a long way in not just incentivizing small savers but also help in financial inclusion.

Oil prices are on the decline

As renewed concerns over global demand brought an end to a rally that pushed up prices by about 19% over the past four sessions. Growth concerns in China have especially prompted renewed concern for demand, after the HSBC China services PMI reported a six-month low of 51.8 in January, compared with 53.4 in December. Crude futures -3.2% to $51.41, as investors ask if oil has really found a bottom.

Change in the eligibility limit for foreign exchange remittances

The RBI decided to enhance the limit under the LRS to USD 250,000 per person per year. Furthermore, in order to ensure ease of transactions, it has also been decided in consultation with the Government that all the facilities for release of exchange/ remittances for current account transactions available to resident individuals under Schedule III to Foreign Exchange Management (Current Account Transactions) Rules 2000, as amended from time to time, shall also be subsumed under this limit.

RBI Monetary Policy statement

The Reserve Bank of India (RBI) kept the benchmark interest rates unchanged at the recently concluded bi-monthly monetary policy meeting on Tuesday. It however, lowered the proportion of funds banks have to deposit with it (SLR) by 50 basis points to 21.5% from an earlier 22%.

The Reserve Bank of Australia has jumped on the easing bandwagon, becoming the latest global central bank to cut interest rates in response to slowing inflation and concerns over economic growth. The RBA lowered its benchmark rate by 25 bps - its first change since August 2013 - to a new record low of 2.25%. The news sent the Australian dollar skidding to a six-year low of $0.7650, while the S&P/ASX 200 Index closed up 1.5% at 5,707.37 - its highest close since May 2008.

Russia’s GDP is expected to shrink by 3% in 2015 with oil prices at $50/bbl and an estimated capital outflow at $115B, said the country's economy minister, over the weekend. Inflation in 2015 is now forecast to stand at 12%, up from the previous estimate of 7.5%, he added. The announcement comes just days after the Russian central bank unexpectedly lowered its key interest rate by two percentage points to 15%, and almost a week after the country's credit rating was cut to "junk status" at Standard & Poor's.

According to figures released by the U.N. Conference on Trade and Development, China became the world’s top destination for foreign direct investment in 2014, edging the U.S. out of that position for the first time in more than a decade. Foreign businesses invested $127.6B in China last year, up from $123.9B in 2013, while their investments in the U.S. fell to $86B from $230.8B. The U.S. also slipped behind Hong Kong, falling into third place among all FDI recipients.