Highlights of Third Quarter Review of RBI Monetary Policy 2008-09
The Bank Rate has been kept unchanged at 6.0 per cent.
Repo Rate/Reverse Repo Rate
The repo rate under the LAF has been kept unchanged at 5.5 per cent.
The reverse repo rate under the LAF has been kept unchanged at 4.0 per cent.
The Reserve Bank has the flexibility to conduct repo/reverse repo auctions at a fixed rate or at variable rates as circumstances warrant.
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 flexibly 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.
Cash Reserve Ratio
The cash reserve ratio (CRR) of scheduled banks has been kept unchanged at 5.0 per cent of NDTL.
The Reserve Bank has allowed banks to avail liquidity support under the LAF for the purpose of meeting the funding requirements of mutual funds (MFs), non-banking financial companies (NBFCs) and housing finance companies (HFCs) through relaxation in the maintenance of SLR up to 1.5 per cent of their NDTL. Second, a special refinance facility for scheduled commercial banks (excluding RRBs) was provided by the Reserve Bank on November 1, 2008 under Section 17 (3B) of the RBI Act, 1934 up to 1.0 per cent of each bank’s NDTL as on October 24, 2008. Both these facilities are currently available up to June 30, 2009. In order to ensure that banks continue to have flexibility in their liquidity management operations in the current market conditions, it has been decided:
• To extend both the refinance facilities up to September 30, 2009.
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