REWIND Reddy's first policy (November 2003)

MID-TERM REVIEW OF ANNUAL POLICY 2004-05

• Bank Rate kept unchanged at six per cent.
• CRR kept unchanged at 4.5 per cent.
• IBA to advise banks on benchmark prime lending rate.
• Measures to improve credit delivery to agriculture and SSI sectors.
• Banks to ensure hedging of foreign currency loans to corporates above $10 million except for exporters and forex expenditures.
• Flexibility to exporters in realisation of export proceeds and write-off of overdue up to 10 per cent of their export proceeds in a calendar year.
• Roadmap for financial institutions to adopt the 90-day norm for recognition of loan impairment.
• Payment of tax refunds through electronic clearing services.
• Entire export credit refinance made available at the reverse repo rate.
• A gold card scheme for creditworthy exporters drawn up.
• Banks allowed to raise long-term bonds to finance infrastructure.
• The extant limit on unsecured exposures for banks withdrawn.
• Exposures on all public financial institutions to attract a risk weight of 100 per cent.
• Banks required to maintain capital charge for market risk in a phased manner.

STANCE

• The stance of the monetary policy continues to be the provision of liquidity to meet credit growth and support investment demand with a vigil on the price level and a preference for a soft and flexible interest rate environment.
• Continuance of measures with an accent on implementation with the objective of facilitating easy transactions by common people.
• Support economic growth consistent with stability by the strengthening of institutional capacity through a consultative process in the medium-term.