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Full Text of First Quarter Review of Annual Monetary Policy for the Year 2007-08 click here



First Quarter Review of Annual Monetary Policy for the Year 2007-08


III. Monetary Measures

(a) Bank Rate

97. The Bank Rate has been kept unchanged at 6.0 per cent.

(b) Repo Rate/Reverse Repo Rate

98. The repo rate under the LAF is kept unchanged at 7.75 per cent.

99. The reverse repo rate under the LAF is kept unchanged at 6.0 per cent.

100. In view of the current macroeconomic and overall monetary and liquidity conditions, it has been decided to withdraw the ceiling of Rs. 3,000 crore on daily reverse repo under the LAF with effect from Monday, August 6, 2007. The Reserve Bank, however, retains the discretion to re-impose a ceiling as appropriate.

101. The Reserve Bank has the flexibility to conduct repo/reverse repo auctions at a fixed rate or at variable rates as circumstances warrant.

102. The Reserve Bank retains the option to conduct overnight or longer term repo/reverse repo under the LAF depending on market conditions and other relevant factors. The Reserve Bank will continue to use this flexibility including the right to accept or reject tender(s) under the LAF, wholly or partially, if deemed fit, so as to make efficient use of the LAF in daily liquidity management.

103. The second LAF, which was introduced from November 28, 2005 and is conducted between 3.00 p.m. and 3.45 p.m. on a daily basis, is withdrawn with effect from Monday, August 6, 2007.

(c) Cash Reserve Ratio

104. The cash reserve ratio (CRR) of scheduled banks is currently at 6.5 per cent. On a review of the current liquidity situation, it is considered desirable to increase the CRR by 50 basis points to 7.0 per cent with effect from the fortnight beginning August 4, 2007.

Click Here For Highlights of First Quarter Review of its Annual Policy Statement for 2007-08

Click Here For Macroeconomic and Monetary Developments: First Quarter 2007-08




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