The RBI has set the loan-to-value ratio for banks? gold loans at 75%, on par with non-banking finance companies lending against gold. ?As a prudential measure, it has been decided to prescribe a Loan-to-Value (LTV) Ratio of not exceeding 75% for banks? lending against gold jewellery,? the central bank said in a release on Monday. Further, the RBI said that gold jewellery as collateral can be valued at the average of the closing price of 22 carat gold for the preceding 30 days as quoted by the India Bullion and Jewellers Association. In case of lower quality gold, the bank must translate the collateral into 22 carat and value accordingly, the central bank added.
MCX-SX kicks off interest rate futures
Cash-settled interest rate futures started trading in MCX Stock Exchange (MCX-SX) on Monday. The IRF contract for the 10-year benchmark 8.83% 2023 bond attracted the highest volume at R150 crore ($24.4 million) with a last traded price of R101.65. The other IRF contract traded is the 7.16% 2023 bonds on Monday. The National Stock Exchange will start trading IRF contracts from Tuesday, while BSE will start trading them from January 28.
No sign of short-term R swap rates easing
Improvement in liquidity condition is unlikely to help ease short-term rupee overnight index swap (OIS) rates below 7.75%, as RBI may not slash policy rates at its upcoming meeting, says a report. ?A moderate improvement in liquidity will not be sufficient to push front-end swap rates below the 7.75% as the RBI is likely to hold the rates,? DBS said in the report on Monday. The financial services firm sees the one-year OIS rate hovering between 7.75 and 8.25% in the medium-term. However, in the short-term, there is scope for front-end rupee OIS rates to head lower as risk premia become more compressed, it noted.
