Policy in 2 minutes
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 8%
Key objectives
- Cut in CRR is for keeping liquidity comfortable to support growth
- Growth stimulus of the policy actions will be reinforced
- Medium-term inflation expectations
Growth & inflation
- GDP growth for 2012-13 is revised downwards to 5.8% from 6.5% in July
- WPI-based 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 brought down to 14% from the 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%
- Rationalising priority sector lending norms
- Banks to put in place mechanism for information sharing by end-December to address the NPA problem
- Banks asked to have board approved for stipulating a limit on the unhedged position of companies
- Urban cooperative banks allowed to undertake repo transactions in corporate bonds