Pointers To The Future

A general refinance facility introduced for banks of up to one per cent of average aggregate deposits during 1996-97 and pegged

Implication

to the revived Bank Rate.

Moving away from sector specific refinance

Final Objective

to an overall general refinance facility

The central bank will use the general refinance

facility pegged to the Bank Rate to signal its

monetary stance to the financial sector.

Action

The interest rate on NRE deposits reduced to the domestic term deposit levels.

Implication

Makes NRE deposits less attractive for depositors

Final Objective

Brings about a rationalisation in the structure of deposits so that rupee deposits, regardless of the point of origin are similarly priced

Action

Authorised dealers permitted to borrow and invest up to $10 million in overseas money markets.

Implication

Banks can begin to gain experience in dealing in foreign markets and learn the tricks and nuances of the markets.

Final Objective

Prepares the financial sector for full rupee convertibility.

Action

Ten per cent CRR imposed on all forms of incremental NRI deposits

Implication

Increases the cost of all such deposits for banks

Final Objective

A uniform system of reserve requirements to be imposed on all liabilities to the public.