Bank Rate, Crr May Be Cut

Credit Policy

The Reserve Bank of India (RBI) had slashed the bank rate, the repurchase rate (repo) as well as the cash reserve ratio (CRR) for banks by 25 basis points each (one basis point is one-hundredth of a percentage point) in its last credit policy in October 2002. Will RBI Governor Bimal Jalan do an encore when he announces his eleventh credit policy next week?

The banking industry feels he will. The central bank had cut the repo rate and the savings bank rate by half a percentage point on February 28, 2002, hours after the Union Budget was presented. Finance Minister Jaswant Singh had announced in the Budget that the small savings rate as well as the public provident fund rate were to be cut by one percentage point each.