Cuts repo rate by 25 basis points to 7.25 per cent.
Reverse repo rate falls to 6.25 per cent
Cash reserve ratio unchanged at 4.00 per cent
Marginal Standing Facility rate adjusted to 8.25 per cent
Bank rate adjusted to 8.25 percent with immediate effect
Full Details Here
The Reserve Bank of India cut its benchmark interest rate by 25 basis
points on Friday for the third time since January, as expected, as
growth slows and inflation ebbs, but said there is little room to ease
monetary policy further, disappointing markets.
Following are highlights from the monetary policy statement:
POLICY MEASURES
Cuts repo rate by 25 basis points to 7.25 per cent.
Reverse repo rate falls to 6.25 per cent
Cash reserve ratio unchanged at 4.00 per cent
Marginal Standing Facility rate adjusted to 8.25 per cent
Bank rate adjusted to 8.25 percent with immediate effect
POLICY STANCE
India cbank says there is little space for monetary easing
Says to actively manage liquidity to reinforce monetary transmission
Says biggest risk to economy is current account deficit
Says monetary policy cannot afford to lower guard against possibility
of resurgence of inflationary pressures
Says risks from current account deficit could warrant swift reversal
of policy stance
Says will use "all instruments" at command to condition inflation at 5
percent by March 2014
FORECASTS
Baseline GDP growth forecast for 2013/14 at 5.7 per cent
Wholesale price index inflation projection during 2013/14 at around 5.5 per cent
M3 growth projection for 2013/14 at 13 per cent
Credit growth projection at 15 per cent, deposit growth at 14 per cent
PRUDENTIAL MEASURES
Says banks must cut hold-to-maturity bond portfolio by 50 bps every
quarter starting June quarter
Proposes to restrict gold import on consignment basis by banks only to
meet genuine need of jewellery exporters. Guidelines to be issued by
May 31
Proposes to restrict bank loans against security of gold coins of up
to 50 gram weight. Guidelines to be issued by end-May
Proposes to raise capital risk weight, provisioning requirement on
loans to corporates in case of unhedged forex exposures. Guidelines
will be issues by end-June
Proposes to allow foreign institutional investors to hedge currency
risk with domestic exchange traded futures. Draft guidelines will be
issued by end-July
Proposes to increase loan limit for micro and small enterprises in the
services sector. Guidelines to be issues separately.
