CURRENT UPDATE : RBI - FOURTH BI-MONTHLY MONETARY POLICY STATEMENT, 2014-15

FOURTH BI-MONTHLY MONETARY POLICY STATEMENT

Monetary and Liquidity Measures

F Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent;

F keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL);

F reduce the liquidity provided under the export credit refinance (ECR) facility from 32 per cent of eligible export credit outstanding to 15 per cent with effect from October 10, 2014;

F continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system through auctions; and

F continue with daily one-day term repos and reverse repos to smooth liquidity.

Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per cent.

CURRENT RATES
POLICY RATES	BANK RATE	9%
	REPO RATE	8%
	REVERSE REPO RATE	7%
	MARGINAL STANDING FACILITY RATE	9%
RESERVE RATIO	CRR	4%
	SLR	22%
LENDING RATE	BASE RATE	10% - 10.25%

Reserve Bank Governor Raghuram Rajan hoped that inflation will moderate to acceptable level of 6 per cent by January 2016 and maintained that the GDP growth in the current fiscal will be 5.5 per cent, same as projected earlier.

While the unchanged policy will not result in any relief to borrowers in the festive season, RBI relaxed the 'know your customer' (KYC), norms by allowing self-certification of documents needed for opening bank accounts.

The central bank is also in the process of modifying the definition of "wilful defaulters" so as to bring the directors of defaulting companies within its ambit and announced setting up of a Central Fraud Registry to check frauds.