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Daily News RBI Credit Policies (1999-2005)
Part I. Mid-term Review of Annual Statement on Monetary Policy for the Year 2005-06
Monetary Measures
(a) Bank Rate
51. In the annual policy Statement of April 2005, 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 unchanged at 6.0 per cent.
(b) Reverse Repo Rate
52. In view of the current macroeconomic and overall monetary conditions, it has been decided:
• to increase the fixed reverse repo rate under the liquidity adjustment facility (LAF) of the Reserve Bank by 25 basis points with effect from October 26, 2005 to 5.25 per cent from 5.0 per cent.
53. The repo rate will continue to be linked to the reverse repo rate. The spread between the reverse repo rate and the repo rate has been retained at 100 basis points, as at present. Accordingly, the fixed repo rate under LAF will be 6.25 per cent, effective October 26, 2005.
(c) Cash Reserve Ratio
54. The cash reserve ratio (CRR) of scheduled banks is currently at 5.0 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 at 5.0 per cent unchanged.
Third Quarter Review
55. The Third Quarter Review of this part of the annual policy Statement will be undertaken on Tuesday, January 24, 2006.
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