Here's a brief overview of RBI's half-yearly monetary policy that was announced today.
Monetary measures
* Cash Reserve Ratio (CRR) of banks cut by 25 basis points (bps) to 4.25% effective the fortnight beginning November 3.
* No change in repo rate.
* Bank rate stands unchanged at 9%.
Key objectives
* Cut in CRR is for keeping liquidity comfortable to support growth.
* Growth stimulus of the policy actions will be reinforced.
* Anchor medium-term inflation expectations.
Growth & Inflationary
* GDP growth for 2012-13 is revised downwards to 5.8% from 6.5% in July.
* WPI inflation for March 2013 is raised to 7.5% from 7% indicated in July.
Credit - deposit growth
* Non-food credit growth projection revised to 16% from 17% projected in April.
* Deposit growth projection has been kept unchanged at 15%.
* Money supply growth projection revised downwards to 14% from 15% projected in April.
Regulatory steps
* Settlement cycle of primary auction in Treasury Bills (T-Bills) reduced to T+1 from T+2 earlier.
* Move towards developing a trade repository for Over The Counter (OTC) derivatives.
* Definition of micro and small enterprises modified to facilitate early rehabilitation of potentially viable sick units.
* Panel set up to examine feasibility on long term fixed rate loan product
Measures for banks
* Provision for restructured standard accounts raised to 2.75% from 2% currently.
* Rationali2ing priority sector lending norms
* Banks to put in place mechanism for information sharing by end-December to address NPA problem
* Banks asked to have board approved for stipulating a limit on the unhedged position of corporates
* Urban Co-Operative Banks allowed to undertake repo transactions in corporate bonds