Banks Slide as RBI Rates Unchanged

Reserve Bank of India (RBI) today left key rates – repo, reverse repo, Bank Rate and CRR – unchanged in its third quarter review of annual statement on monetary policy for the year 2007-08. While Bank Rate has been left unchanged at 6%, reverse repo and repo rates have been held steady at 6% and 7.75%, respectively. Cash Reserve Ratio (CRR) has been left unchanged at 7.5%. The market was expecting the Reserve Bank of India to lower the short-term lending rate viz. the repo rate by 25 basis points, after a hefty US rate cut last week.

BSE Bankex slumped 3.27% to 11,144.79. BSE Auto index declined 1.53% to 4,850.77 and BSE Realty index down 1.01% to 10,580.98. Banking stocks plunged. ICICI Bank (down 3.35% to Rs 1,231), HDFC Bank (down 2.65% to Rs 1,535) and State Bank of India (down 1.7% to Rs 2,267) edged lower.