CURRENT UPDATE : RBI SECOND QUARTER REVIEW OF MONETARY POLICY 2013-14

RBI SECOND QUARTER REVIEW OF MONETARY POLICY 2013-14

Monetary and Liquidity Measures

Following an assessment of the evolving macroeconomic situation, the Reserve Bank has decided to:

F Reduce the marginal standing facility (MSF) rate by 25 basis points from 9.0 per cent to 8.75 per cent with immediate effect;

F Increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.5 per cent to 7.75 per cent with immediate effect

F Keep cash reserve ratio (CRR) unchanged at 4.0 per cent of net demand and time liability (NDTL); and

F Increase the liquidity provided through term repos of 7-day and 14-day tenor from 0.25 per cent of NDTL of the banking system to 0.5 per cent with immediate effect.

Consequently, the reverse repo rate under the LAF stands adjusted to 6.75 per cent and the Bank Rate stands reduced to 8.75 per cent with immediate effect. With these changes, the MSF rate and the Bank Rate are recalibrated to 100 basis points above the repo rate.

Mid-Quarter Review of Monetary Policy 2013-14

The next Mid-Quarter Review of Monetary Policy for 2013-14 will be announced through a press release on Wednesday, December 18, 2013.

Third Quarter Review of Monetary Policy 2013-14

The Third Quarter Review of Monetary Policy for 2013-14 is scheduled on Tuesday, January 28, 2014.

Developmental and Regulatory Policies

The Reserve Bank’s developmental measures over the next few quarters will be built on five pillars. These are:

Ä  Clarifying and strengthening the monetary policy framework.

Ä  Strengthening banking structure through new entry, branch expansion, encouraging new varieties of banks, and moving foreign banks into better regulated organisational forms.

Ä  Broadening and deepening financial markets and increasing their liquidity and resilience so that they can help absorb the risks entailed in financing India’s growth.

Ä  Expanding access to finance to small and medium enterprises, the unorganised sector, the poor, and remote and underserved areas of the country through measures to foster financial inclusion.

Ä  Improving the system’s ability to deal with corporate distress and financial institution distress by strengthening real and financial restructuring as well as debt recovery

CURRENT RATES
POLICY RATES	BANK RATE	8.75%
	REPO RATE	7.75%
	REVERSE REPO RATE	6.75%
	MARGINAL STANDING FACILITY RATE	8.75%
RESERVE RATIO	CRR	4%
	SLR	23%
LENDING RATE	BASE RATE	9.80% - 10.25%