EFFECT OF GLOBAL INTEREST RATES ON INDIA

CHAPTER- 1
INTRODUCTION INTEREST RATE Interest rates are the single most important fundamental driver in Forex and the direction of monetary policy is essential in shaping developments in currencies. This direction is determined by the vast array of economic reports, central bank rhetoric and movements in equity and bond markets. Knowing where the various interest rates stand is not enough by itself. Instead, assessing where each nations monetary policy is heading relative to others is paramount in getting the best bang out of your buck in selecting the appropriate foreign exchange pair. DETERMINATION FO INTEREST RATES We have referred in various places in the course to the 'interest rate' in the economy and we have considered the interest rate as an instrument of monetary policy. However, we have not looked in a systematic way at the factors influencing the level of interest rates in the economy. In fact, two quite different appraoches to the determination of interest rates have been taken by economists. One of these we considered when we were discussing the demand for money notably, the idea of the speculative demand for money put forward by Keynes. This is known as the liquidity preferencetheory of interest rates. Influential though this model has been, another theory has dominated the thoughts of most economists. It is known as the loanable funds theory. We shall look at it first here. The Loanable Funds Theory of Interest Rates The loanable funds theory is a theory of the determination of real interest rates - that is, rates of return expressed in terms of real purchasing power. The theory derives from the notion that savers make a decision between consumption now and consumption in the future. The more people consume now out of present income (and the less they save and hence the smaller are the funds available for investment), the lower will be future income. Thus, a trade off always exists between present consumption and future consumption. It is assumed that people would prefer to consume now, other things being equal. Hence, to persuade them to save and provide funds for investment, they must be paid interest. The real interest rate is therefore the rate needed to persuade people to forgo present consumption. It was sometimes referred to as the

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reward for waiting - the reward for postponing the pleasure of consumption and waiting to consume later. It follows that savings will be positively related to the rate of interest. Liquidity Theory Liquidity theory suggests that investors will choose longer term maturities if they are provided with additional yield that compensates them for lack of liquidity. As a result, liquidity theory supports that forward interest rates possess a liquidity premium and an interest rate expectation component. Preferred Habitat Hypothesis Preferred habitat hypothesis suggests that investors who usually prefer one maturity horizon over another can be convinced to change maturity horizons given an appropriate premium. This suggests that the shape of the yield curve depends on the policies of market participants. Market Segmentation Theory Market segmentation theory suggests that different investors have different investment horizons that arise from the nature of their business or as a result of investment restrictions. These prevent them from dramatically changing maturity dates to take advantage of temporary opportunities in interest rates. Companies that have a long investment time horizon will therefore be less interested in taking advantage of opportunities at the short end of the curve. FACTORS THAT INFLUENCE INTEREST RATES Interest rate levels are in essence determined by the laws of supply and demand. In an economic environment in which demand for loans is high, lending institutions are able to command more lucrative lending arrangements. Conversely, when banks and other institutions find that the market for loans is a tepid one (or worse), interest rates are typically lowered accordingly to encourage businesses and individuals to take out loans. Interest rates are a key instrument of American fiscal policy. The Federal Reserve determines the interest rate at which the federal government will bestow loans, and banks and other financial institutions, which establish their own interest rates to parallel those of the "Fed, " typically follow suit. This ripple effect can have dramatic impact on the U.S. economy. In a recessionary climate, for instance, the Federal Reserve might lower interest rates in order to
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create an environment that encourages spending. Conversely, the Federal Reserve often implements interest rate hikes when its board members become concerned that the economy is "overheating" and prone to inflation. By raising or lowering their discount interest rate on loans, summarized Robert Heilbroner and Lester Thurow in Economics Explained, "The Federal Reserve can make it attractive or unattractive for member banks to borrow or augment their reserves. Inaddition, changes in the discount rate tend to influence the whole structure of interest rates, either tightening or loosening money. When interest rates are high, we have what we call tight money. This means not only that borrowers have to pay higher rates, but that banks are more selective in judging the credit worthiness of business applications for loans. Conversely, when interest rates decline, money is called easy, meaning that it is not only cheapter but also easier to borrow." The monetary tools of the Federal Reserve work most directly on short-term interest rates. Interest rates for longer maturities are indirectly affected through the market's perception of government policy and its impact on the economy. Another key factor in determining interest rates is the lending agency's confidence that the moneyand the interest on that moneywill be paid in full and in a timely fashion. Default risk encompasses a wide range of circumstances, from borrowers who completely fail to fulfill their obligations to those that are merely late with a scheduled payment. If lenders are uncertain about the borrower's ability to adhere to the specifications of the loan arrangement, they will often demand a higher rate of return or risk premium. Borrowers with an established credit history, on the other hand, qualify for what is known as the prime interest rate, which is a low interest rate1.

CHAPTER 2
GLOBAL INTEREST RATE:

1 Interest Rates - percentage, type, cost, Types of interest rates http://www.referenceforbusiness.com/small/Inc-Mail/Interest-Rates.html#ixzz1H9xRUHRH

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Interest rates are the single most important fundamental driver in Forex and the direction of monetary policy is essential in shaping developments in currencies. This direction is determined by the vast array of economic reports, central bank rhetoric and movements in equity and bond markets. Knowing where the various interest rates stand is not enough by itself. Instead, assessing where each nations monetary policy is heading relative to others is paramount in getting the best bang out of your buck in selecting the appropriate foreign exchange pair. The chart shows the interest rate path of 6 central banks since 2002. The much discussed carry trade (selling low yielding currencies to purchase in higher yielding ones) was its strongest between 2005 and 2007 when Japanese interest rates remained below 1.00% while all other central banks began raising rates. The rate hikes of the U.S., Australia, Canada and the Eurozone were particularly aggressive during the period, allowing their currencies to post sharp gains versus the yen. The Japanese yen and Swiss franc are characterized by their low-yielding status, but the yen is more notorious for its sharp declines during the accumulation of carry trades as well as for its rapid gains during the unwinding of carry trades. The main reason is the size of the Japanese economy, whose GDP of $4.3 trillion is the worlds second largest. More significantly, only 1 to 2 % of Japans 1,500 trillion yen (US$13 trillion) in household financial assets is invested
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overseas, while the rest is desperately searching for higher yields in an economy with predominantly low interest rates. The Japanese search for foreign yield had begun with foreign currency deposits, which fell out of favor due to their high commissions and fees. Investors then shifted toward foreign bond funds, which offered higher yields as well as monthly dividend payments aimed not only at enhancing interest income but also to offset any potential decline in the value of the bonds. Taking a closer look at interest rate developments, we note that the US Federal Reserve preceded all other central banks (in the chart) in cutting interest rates (summer 2007), while other central banks were either tightening or on hold. This policy contrast was largely responsible for extending the dollars tumble in 2007 and part of 2008. But as the global slowdown intensified, central banks in Australia, UK, New Zealand and Canada were largely seen joining the Fed in slashing their interest rates. As the deepening economic slowdown in Europe, Japan and antipodean countries is perceived to be at its early stage relative to that of the US, markets reason that the US may be the first to slow and first to recover (first in first out), prompting the sharp August rally in the US dollar. This theme is clearly illustrated in the accompanying interest rate chart, showing US rates unchanged since April, following 225-bps of easing, standing below all other interest rates with the exception of Japan. Markets expect the easing campaigns to resume in the UK, Canada and New Zealand, while the Reserve Bank of Australia, is expected to begin easing in Q4. The European Central Bank and Swiss National Bank are seen to start their easing campaign in early 2009.

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Assessing the global interest rate story from a US perspective, the chart below suggests the eroding interest rate differential may have reached its worst thanks to US rates being unchanged since April while other nations rates have been cut since then (UK, Canada and New Zealand). And even if the Federal Reserve were forced to cut rates later this year, it would have to do so due to clear economic deterioration, in which case may also drive other central banks to ease. The exception to this assumption is in the event that further rate cuts are a result of deepening corrosion in US-specific dynamics (renewed housing slump, accelerating unemployment, deteriorating consumption and re-emerging worries to the financial system). Such would be a repeat of conditions in mid June into early July when escalating worries dragged US and global stocks as well as the dollar2.

Global interest rates have increased in 2011. Led by China and other Asian countries, more central banks have increased benchmark lending rates than decreased them this year. Earlier this year, The People's Bank of China pushed the one-year yuan lending rate in China up to 6.06 percent from 5.81 percent. Other major economic powers like Australia, Canada and the European Central Bank have held rates steady at recent meetings, but the tone from
2 http://www.ashraflaidi.com/charts/global-interest-rates.asp

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policymakers is tipping towards higher interest rates. Countries that have seen interest rate increases include:: Sweden +25 points Russia +25 points Brazil +50 points Columbia +25 points Peru +25 points Vietnam +200 points South Korea +25 points Taiwan +25 points Bank of Indonesia +25 points Israel +25 points Chile +25 points India +25 points

The Central Bank of Iceland and Central Bank of Kenya are two of the few central banks to lower their rates recently. Both countries have much higher inflation targets than the major economic powers and could afford to drop rates in order to try to spur growth. Economists are now forecasting that the European Central Bank (ECB) and the Bank of England are likely to increase interest rates in 2011 after holding their key interest rates low for over two years. Inflation has accelerated across Europe, led by food and energy prices. The ECB also continues to face significant battles with the potential default of the sovereign debt of weaker members. The benchmark ECB interest rate, currently set at 1.00 percent, is expected to be increased to at least 1.75 percent by the end of the year. The United States could be one the last G-20 economic powers to raise interest rates if the Fed stays true to their public comments. The Bernanke-led Fed is showing no resistance to the calls from inflation hawks to slowly raise rates. Other countries with interest rates nearly as low as

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the U.S. include Hong Kong and Switzerland. Both countries are also starting to hear dissenting views on their ultra-low interest rate policies from within their borders3.

INDIAN PERSPECTIVE: After the first phase and second phase of financial reforms, in the 1980s commercial banks began to function in a highly regulated environment, with administered interest rate structure, quantitative restrictions on credit flows, high reserve requirements and reservation of a significant proportion of lendable resources for the priority and the government sectors. The restrictive regulatory norms led to the credit rationing for the private sector and the interest rate controls led to the unproductive use of credit and low levels of investment and growth. The resultant financial repression led to decline in productivity and efficiency and erosion of profitability of the banking sector in general. This was when the need to develop a sound commercial banking system was felt. This was worked out mainly with the help of the recommendations of the Committee on the Financial System (Chairman: Shri M. Narasimham), 1991. The resultant financial sector reforms called for interest rate flexibility for banks, reduction in reserve requirements, and a number of structural measures. Interest rates have thus been steadily deregulated in the past few years with banks being free to fix their Prime Lending Rates(PLRs) and deposit rates for most banking products. Credit market reforms included introduction of new instruments of credit, changes in the credit delivery system and integration of functional roles of diverse players, such as, banks, financial institutions and non-banking financial companies (Nbfcs). Domestic Private Sector Banks were allowed to be set up, PSBs were allowed to access the markets to shore up their Cars. BPLR and its advantages and disadvantages: BPLR (Benchmark Prime Lending Rate) is the interest rate that commercial banks charge their most credit-worthy customers. According to the Reserve Bank of India banks are free to fix the Benchmark Prime Lending Rate (BPLR) with the approval of their respective Boards. The PLR is influenced by RBIs policy rates the repo rate, reverse repo rate and cash reserve ratio apart from the banks policy. In simple words, availability of funds i.e. liquidity in the banking

3 http://www.money-rates.com/keyrates.htm

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system and demand for credit by consumers (both retail and industrial) determine what the BPLR should be. Advantages of BPLR based lending 1. Banks can lend funds to corporate and other clients at Sub-PLR rate in order to increase profitability and security of funds as huge turnover of funds in short term will compensate the difference in lending rates. 2. Banks adjust Sub-PLR rates with higher lending rates on retail customers like credit cards, vehicle and housing loans. 3. Banks funds will not remain idle as they can lend it at their own will after getting the approval of board in case of any lending below BPLR. 4. Sound corporate got good bargaining loan rates and their profitability increased. Perfect competition existed among banks and corporates availed the benefits. No control of RBI on rates. 5. External Commercial Borrowings (ECB)in which lending rate is very cheap is one of the factor which influences the bigger banks to lend at SubPLR rate and the BPLR based lending helps the banks to face the competition from overseas banks. 6. Banks used this lending way in beneficial way even for short term loans in order to avoid parking funds with RBI at 3.25%. Disadvantages 1. Banks, in order to face competition from other banks, had to lower their lending rates below BPLR in order to retain clients and hence face competition from international banks which lends on ECB platform and the rate is very low. Since nowadays, most of the big corporate have become global companies, raising of funds from overseas banks is easy with the approval of RBI and positive Govt policies for raising loans outside India. Some of the banks in India suffered profit reduction due to this due to excess liquidity. 2. Customers who are compelled to take loans in India only have to bear the brunt of higher than BPLR in order to compensate the loss to banks. 3. Sound corporate clients are the beneficiary of this method commanding on banks to lend at cheaper rate for them though they got the capacity to bear the BPLR plus rates. Capacity to bear the rate is compromised in order to retain clients by banks.

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4. Discrimination of old customers vs. new customers existed almost in all banks. Banks, for example, give housing loans for lesser interest rates for new customers as compared to interest rate charged for the same period of lending to existing customers. 5. RBI directed the banks to park the idle funds with it at 3.25% but banks resort to short term lending at higher rate thus beating the RBI policy of keeping control over funds in the market. Due to complaints about indiscriminate lending rates by banks, RBI appointed a committee headed by RBI executive director Deepak Mohanty. He had suggested discontinuing the usage of a banks prime lending rate (PLR) as the benchmark for variable rate loans. Instead, he wants banks to arrive at a base rate that reflects the cost of one-year deposits and price loans over this base rate. The panel has also proposed a ceiling on the extent of loans that can be granted below the benchmark rate. Most banks typically pass on the benefit of falling rates only to fresh customers. RBI governor D Subbarao has repeatedly said though the central bank has slashed its repo rate (at which it lends to banks) by 425 basis points in the last one year, prime lending rates of banks have fallen by only around 200 basis points. Finally RBI accepted the recommendation of Deepak Mohanty for discontinuing BPLR and in its place brought Base rate.

RBI had announced the base rate system which will set the interest rates for the bankers to lend their borrowers. Earlier the rate is known as the Prime Lending Rate(PLR) for the banks. Normally the banks can not lend the money below the PLR to avoid any loss or risk. But, banks started offering the loans cheaper than the PLR to lure the customers. This is also called as the Teaser Loan Rates where the actual loan rates will increase in the later period of time. That will put the extra burden on the borrowers. RBI come up with the new base rate system where banks can lend the loans based on the new rating system. Earlier it announced that the new system will be effective from April 1,2010. After hearing the request from most of the banks to postpone the new system implementation for another few months, recently RBI announced that the new system will be effective from July 1, 2010. Also RBI had agreed to exempt the three categories of the loans under this system as follows: Staffer Loans
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Loans against Fixed Deposits Loans under the differential rate of interest scheme After the implementation of the new system, it is expected to be increase in the interest rates on the various loans. It includes the home loans which currently offer the teaser rates like 8% for first two years and later the new rates will be effective4. Drawbacks likely to exists in Base rate mechanism: 1. The new base rate may account for the cost of getting deposits but will ignore the cost of non-performing assets. But this can be covered under unallocated overhead costs by way of non-performing asset rate. Since Base rate is a new concept in Indian banking industry, some assumptions are to be taken in order to be within the criteria set by committee and it be reasonable enough to convince RBI, the watch dog of banking industry. 2. The base rate will differ from bank to bank. It could be in the range of 7% to 9%. So weaker banks will have higher rate and find the going tough. The stronger ones will slowly absorb the weaker ones thus amalgamation of banks would be on the anvil. Competition among banks will reduce and ultimately bank customers may suffer if the banks are not prudent enough to curtail costs and overheads including NPA. Benefits Existing loan holders can opt for new loans which may be cheaper as compared to old one due to competition. The lowest interest base rate announced by bank like Indusbank , HDFC bank,Axis bank and ICICI bank which is 7.25% to 7.5%. T. SBI base rate is 8%. So in order to corner loan business from corporate clients, banks are reducing their base rate to the minimal and it is beneficial to business community especially SMEs . But in the long run, a cartel may be formed and interest rate may be hiked slowly and small fishes in banks will be swallowed by big fishes. Then there will be competition between govt banks and few private banks.

Proposed Amendments in the Mechanism:

4 http://www.thinkplaninvest.com/2010/03/implementation-of-base-rates-from-july-12010/

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Ahead of the monetary review, industry chamber Assochamon Sunday asked the RBI to make changes in the base rate mechanism to provide clarity on concessional loans given to industries for their restructuring. In a statement, Assocham President Swati A Piramal also said that the base rate mechanism should cover non-banking finance companies (NBFCs), cooperative banks and regional rural banks (RRBs). The base rate system, a new system for benchmarking lending rates, came into effect from July 2010. The new mechanism, which replaced the prime lending rate system, sets the minimum lending rate for banks. Most banks have set it at 7-8.5 per cent. Piramal said that since base rate is a floor rate, it was unclear how loans given at concessional rates to industries that are being restructured or rehabilitated would be treated. "It is well-known that the banking industry has re- structured a large number of viable units, where the funding of over-dues has been considered at substantially low rates of interest. The present base rate regime is totally silent, and would hit this portfolio and borrowers perceptively," she said. The Assocham president also said that the present arrangement by banks for funding against letters of credit (LCs) and bill discounts would be severely affected by the base rate system as loans are given at substantially-reduced rate due to guaranteed payments. The purpose of the base rate was to expedite the transmission of RBI's policy decisions on interest rates. Banks giving loans to highly-rated corporates at rates below prime lending levels used to result in the transmission getting affected. Assocham said that freedom for banks to adjust base rates quarterly would also come in the way of smooth transmission of RBI decisions. "Currently, the base rates are proposed to be reset every quarter, irrespective of time and tenure of monetary policy instances of RBI. There needs to be parity in timelines. There should be similar timelines in addition to banks' own policy for resetting the base rate. This will ensure monetary policy transmission without gap," the chamber said.
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Piramal also said that the base rate mechanism leaves out government borrowings, which plays a crucial role in determining interest rates. "The government is the biggest borrower in the market, and is often responsible for interest rate swings. The base rate does not appear to cover government borrowings in the sense that these borrowings are related to the prevailing coupon rates," she said. The chamber also asked RBI to include lending by NBFCs, RRBs and co-operative banks in the base rate mechanism5. Global effects of changes in repo and reverse repo rate: The average interest rate set by 11 leading central banks -- the five that decide monetary policy for the G7 nations plus six other major banks has fallen to 1.34 percent from 1.36 percent at the end of last year following a Swedish rate rise in February. The average rate set by central banks of the Group of Seven nations rose to 0.54 percent at the end of 2010 from 0.40 percent at the end of 2009..The following table of average rates is aimed at reflecting the movement of official policy rates during the economic cycle rather than actual borrowingcosts6. As result of such changes follow changes happened globally. On March 17, 2011 Reserve bank of India hiked interest rates for the eighth time in a year as concern about high domestic inflation overpowered fears that the global recovery could be increasingly fragile. The central bank raised its repo, the rate at which it lends to commercial banks, by 25 basis points to 6.75 percent. The reverse repo, the rate it pays to banks for deposits, was also hiked by a quarter point to 5.75 percent. "The underlying inflationary pressures have accentuated, even as risks to growth are emerging," Reserve Bank of India governor Duvvuri Subbarao said in a statement after the bank's regular policy meeting in Mumbai.

5 http://articles.economictimes.indiatimes.com/2010-07-18/news/27597168_1_base-raterate-system-lending-rate 6 http://in.news.yahoo.com/factbox-global-interest-rates-2011-20110319-023232-390.html

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The bank said it was too early to assess the "macroeconomic consequences" of the devastating Japanese quake and nuclear crisis but warned that a shift from nuclear power could further push up already elevated petroleum prices7. On March 18, 2011 Chile's central bank raised its benchmark interest rate by a bigger-thanexpected 50 basis points and said more hikes will follow as it prioritises its fight against high inflation over a strong currency8. On March 19, 2011 Colombia raised its key interest rate by 25 basis points for the second straight month and signaled further increases to rein in inflation during strong economic growth and surging global prices9.

7 http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/1117096/1/.html 8 http://in.news.yahoo.com/factbox-global-interest-rates-2011-20110318-041629-496.html 9 http://in.news.yahoo.com/factbox-global-interest-rates-2011-20110319-023232-390.html

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CHAPTER 3
CONCLUSION Interest rates are determined by the demand and supply or investment and saving. After the globalization on 1990 the change in the interest rate of the globes changes interest rates round the world. RBI has changed its policies time to time due to the change in the policies of the other countries and there the economical relation between them. The base rate mechanism which has been taken up by RBI has few loopholes and amendment is required to compete with the other countries. The Central Bank of the United States slashed its funds rate by 50 basis points to one per cent. In fact the US is moving towards near zero interest rate economy same as Japan. It appears that regulators of the world economies are left with limited choice to handle the present credit-turned liquidity crisis, which is forcing the world towards recession. Hence the most potent tool of the regulators to bring such crumbling economies back on track viz, the interest rate, is flavour of the season. But usage of this tool is seeing two extremities now. So, if most of the economies are busy in dragging down the interest rate to help the industries get cheap credit; there are economies like Iceland, who have taken extreme step to push the interest rate up, rather excessively. Whooping 600 basis points (ie, six per cent points) rate hike by the Central Bank of Iceland (Sedlabanki Island) on October 28 2008 from 12 to 18 per cent is one example of extreme usage of the interest rate tool by any central bank. Even though the step is taken under the aegis of International Monetary Fund (IMF), but it was told as an effort to save the bankruptcy facing economy of Iceland, which was last year declared as the best country of the world to live in. Irony is that this small economy had cut its interest rate by 350 basis points to 12 per cent, on October 12, only, ie, barely two weeks back. Since several years, the Japanese economy has been regarded as almost zero interest rate economy, where the official rates are 0.5 per cent only, which is principle responsible factor behind a phenomena called carry trade where Japanese or other investors of other countries borrow from banks in Japan at very low interest rates and invest in high interest rate economies like India, China and the US etc. So spread available, while borrowing in low interest currency

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and investing in high interest currency ie, the carry trade was making the Japanese and other investors of the world wealthy and wealthier. But the announcement of cut in federal reserve (FED) funds and discount rate appears to be a step of worlds largest economy America to follow the suit of the second largest economy of the world, Japan. FED funds rate is the rate at which a bank in the US lends federal funds to other bank and usually it is overnight funds rate, which is similar to call rate in India. The US economy is consumption oriented economy and if the people of America decide to spend less on their consumption then it will certainly be nightmarish for the US Fed chief Ben Bernanke. The fear of shrinking economy, due to slowdown in consumer spending of the country, has forced the chief of the central bank of most powerful economy of the world to crawl the economy towards near zero interest rate regimes. Bringing the FED funds rate from 1.5 per cent to 1.00 per cent, as per leading banks in the US, is a step that may bring the interest rate in the US economy equivalent to Japanese interest rate of 0.5 per cent, if the continued credit crisis did not halt in next few months. Apart from reducing funds rate, FED has also announced slashing of 50 basis point discount rate also, bringing it at 1.25 per cent. Discount rate is the rate at which the banks borrow short term funds from FED. Slashing the discount rate will help the banks in the US to borrow cheap from FED. This was the ninth consecutive cut in FED interest rate since September 2007. But seeing the increasing unemployment rate, which leads to 159,000 job cuts and fall of retail sales by 1.2 per cent in September, Bernanke was left with little choice to keep intact the crumbling economy of the US. Slashing the FED funds rate will certainly have some unfreezing effect on credit market of the US, as the interbank lending and borrowing will not be costly. But it is widely expected that even this rate cut may also not come to rescue the sinking US economy; the real problem of this crisis is slowly emerging as the crisis of confidence. The weak response from US indices ie, Dow Jones industrial index (DJIA) and national association of securities dealers automated quotation (NASDAQ) after the rate cut at closing of market on Wednesday proves it. Nevertheless, majority of Asian indices have seen the move of FED, as positive move and opened firm on Thursday.

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For a country like India, FED funds or discount rate may not be having direct bearing, but the Indian entrepreneur, who are starved of dollar funds, may able to borrow from banks in the US with little ease. But the problem is where the dollar is? Shortage of dollar is so acute that the branches of Indian banks situated in the US are asking dollar supply from their parent Indian banks and Reserve Bank of India has to draw some plan on how to meet the dollar demand of branches of Indian banks in the US and western countries10.

BIBLIOGRAPHY
Websites Referred:

http://www.referenceforbusiness.com/small/Inc-Mail/InterestRates.html#ixzz1H9xRUHRH http://www.ashraflaidi.com/charts/global-interest-rates.asp http://www.money-rates.com/keyrates.htm http://www.thinkplaninvest.com/2010/03/implementation-of-base-rates-from-july12010/

10 http://www.merinews.com/article/is-us-is-moving-towards-zero-interest-rateregime/146567.shtml

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http://articles.economictimes.indiatimes.com/2010-07-18/news/27597168_1_base-raterate-system-lending-rate http://in.news.yahoo.com/factbox-global-interest-rates-2011-20110319-023232390.html http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/1117096/1/.htm l http://in.news.yahoo.com/factbox-global-interest-rates-2011-20110318-041629496.html http://in.news.yahoo.com/factbox-global-interest-rates-2011-20110319-023232390.html http://www.merinews.com/article/is-us-is-moving-towards-zero-interest-rateregime/146567.shtml www.rbi.gov.in www.federalreserve.gov

Books Referred:

D.M. Mithani, Money, Banking, International Trade and Public Finance, 15th Edition, Himalaya Publishing House.

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