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Click Here For Highlights of RBI's Annual Policy Statement for 2005-06

Part I. Annual Statement on Monetary Policy for the Year 2005-06

III. Monetary Measures

a) Bank Rate

59. In the mid-term Review of October 2004, the Bank Rate was kept unchanged at 6.0 per cent. On a review of the macroeconomic developments, it is considered desirable to leave the Bank Rate stable (at 6.0 per cent) at present.

(b) Reverse Repo Rate

60. In view of the current macroeconomic and overall monetary conditions, it has been decided:

To increase the fixed reverse repo rate by 25 basis points under the liquidity adjustment facility (LAF) of the Reserve Bank effective from April 29, 2005 to 5.00 per cent from 4.75 per cent.

61. The repo rate will continue to be linked to the reverse repo rate, as at present. However, the spread between the reverse repo rate and the repo rate is reduced by 25 basis points from 125 basis points to 100 basis points with effect from April 29, 2005. Accordingly, the fixed repo rate under LAF will continue to remain at 6.0 per cent.

(c) Cash Reserve Ratio

62. The cash reserve ratio (CRR) of scheduled banks is currently at 5.00 per cent. While the Reserve Bank continues to pursue its medium-term objective of reducing the CRR to the statutory minimum level of 3.0 per cent, on a review of the current liquidity situation, it is felt desirable to keep the present level of CRR (5.00 per cent) unchanged.

First Quarter Review

63. The First Quarter Review of this part of the annual policy Statement will be undertaken on July 26, 2005 and will contain such other changes/ measures as may be necessary.

Return to main page of Annual Policy Statement for the Year 2005-06

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