Mid-term Review of
Monetary and Credit Policy for the year 2003-04
Monetary Policy Measures
· Bank Rate kept unchanged at 6 per cent.
· Cash reserve ratio kept unchanged at 4.5 per cent in view of current liquidity situation.
· The Report of the Internal Group on liquidity adjustment facility (LAF) (which proposed a review of this facility) being placed on the RBI web-site for wider dissemination and comments.
· IBA to advise banks on benchmark PLR.
· Measures to improve credit delivery to agriculture and small scale sectors.
· Advisory Committee/Working Group proposed to make a comprehensive review and suggest ways to improve credit flow to agriculture and small scale sectors and better deployment of RIDF and priority sector resources with SIDBI.
· Simplification of procedures and complete flexibility in micro-finance structure proposed to boost credit flow.
· Further move towards pure inter-bank call/notice money market.
· Flexibility in sale of government securities contracted for purchase with adequate safeguards.
· Banks to ensure hedging of foreign currency loans to corporates above US $ 10 million except for exporters and for forex expenditures.
· Flexibility to exporters in realisation of export proceeds and write off of overdues, up to 10 per cent of their export proceeds in a calendar year.
· Banks advised to quickly build up investment fluctuation reserve (IFR) so that they are better positioned to meet interest rate risks.
· Road map for financial institutions to adopt 90 days norm for recognition of loan impairment.
· Standing Technical Advisory Committee on Financial Regulation for both banks and non-banks proposed.
· Identification and special monitoring system for Systemically Important Financial Intermediaries (SIFIs) proposed in coordination with RBI, SEBI and IRDA.
· Standing Committee to be set up on Procedures and Performance Audit on Public Services rendered by the Reserve Bank.
· Banks advised to constitute Ad-hoc Committees to improve customer services including review of RBI regulations impinging on customer services.
· Working Group proposed to address regulatory and supervisory issues pertaining to Development Finance Institutions (DFIs).
· Extension of good corporate governance practices to PDs, NBFCs and FIs.
· RTGS system scheduled for introduction in January 2004.
· Economic and financial data base with RBI to be placed in public domain for convenience of researchers and other users.
· Select private banks authorised to conduct government business for public convenience.
· Payment of tax refunds through electronic clearing services (ECS) to be introduced.
· Measures for provision of clean currency notes and availability of coins for the convenience of common persons.