Annual Policy Statement for the Year 2007-08
-Highlights (24th April 2007)
Bank Rate, Reverse Repo Rate and Repo Rate kept unchanged.
Greater emphasis on price stability and well-anchored inflation expectations while ensuring a monetary and interest rate environment that supports growth momentum.
Swift response with all appropriate measures to all situations impinging on inflation expectations and the growth momentum
Renewed focus on credit quality and orderly financial markets conditions in securing macroeconomic, in particular, financial stability.
Scheduled banks required to maintain CRR of 6.5 per cent with effect from the fortnight beginning April 28, 2007.
GDP growth projection for 2007-08 at around 8.5 per cent.
Inflation to be contained close to 5.0 per cent during 2007-08. Going forward, the resolve is to condition policy and perceptions for inflation in the range of 4.0-4.5 per cent over the medium term.
M3 expansion to be contained at around 17.0-17.5 per cent during 2007-08.
Deposits projected to increase by around Rs.4,90,000 crore during 2007-08.
Adjusted non-food credit projected to increase by around 24.0-25.0 per cent during 2007-08, implying a graduated deceleration from the average of 29.8 per cent over 2004-07.
Appropriate liquidity to be maintained to meet legitimate credit requirements, consistent with price and financial stability.
Ceiling interest rate on FCNR (B) deposits reduced by 50 basis points to Libor minus 75 basis points.
Ceiling interest rate on NR(E)RA deposits reduced by 50 basis points to LIBOR/SWAP rates.
Average cut-off yield on 182-day Treasury Bills to be used as a benchmark rate for floating rate bonds.
Working Group to be set up to go into all the relevant issues and suggest measures to facilitate the development of interest rate futures market.
Overseas investment limit (total financial commitments) for Indian companies enhanced to 300 per cent of their net worth.
Listed Indian companies limit for portfolio investment abroad in listed overseas companies enhanced to 35 per cent of net worth.
Aggregate ceiling on overseas investment by mutual funds enhanced to US $ 4 billion.
Prepayment of external commercial borrowings (ECBs) without prior Reseve Bank approval increased to US $ 400 million.
Present limit for individuals for any permitted current or capital account transaction increased from US $ 50,000 to US $ 100,000 per financial year in the liberalised remittance scheme.
A Working Group on Currency Futures to be set up to suggest a suitable framework to operationalise the proposal in line with the current legal and regulatory framework.
Risk weight on loans up to Rs.1 lakh against gold and silver ornaments for all categories of banks reduced to 50 per cent.
Introduction of a credit guarantee scheme for distressed farmers.
Indian banks permitted to extend credit and non-credit facilities to step-down subsidiaries within the existing prudential limits and some additional safeguards.
Banks and primary dealers permitted to begin transactions in single-entity credit default swaps.
Risk weight on residential housing loans to individuals for loans up to Rs.20 lakh reduced to 50 per cent as a temporary measure.
Existing relaxed prudential norms applicable to Tier I and Tier II urban cooperative banks extended by one year.
Ceiling rate of interest payable by NBFCs (other than RNBCs) on deposits raised by 150 basis points.
Click Here For full text of Annual Policy Statement for the Year 2006-07
Click Here For Macro economic and Monetary Developments : 2005-06