Highlights of the RBI's Credit Policy

MAIN MEASURES

* No change in bank or repo rate

* Definition of infrastrucutre lending broadened.

* Gold Card Scheme for creditworthy exporters drawn up.

* Limit on the lending of non-bank participants in the call/notice money market reduced to 45 percent effective June 26, 2004.

* Banks allowed to raise long-term bonds to finance infrastructure

* 15% cap on unsecured exposures for banks withdrawn

* Exposures on all public financial institutions (PFIs) to attract a risk weight of 100 per cent

* Banks required to maintain capital charge for market risk in a phased manner

* Banks to make higher provisioning according to the age of NPAs.

 

* Fresh licences to UCBs only after a comprehensive policy.

* Board for Payment and Settlement Systems set up

STANCE OF POLICY

* Provision of adequate liquidity to meet credit growh, support investment and credit demand

* Interest rate environment conducive to maintaining growth momentum and macroeconomic and price stability

TARGETS

* GDP Growth for 2004-05 -- 6.5-7 %

* Inflation Rate: 5%

* Money Supply: 14%

* Credit growth: 16-16.5%

LOOKING FORWARD

* India to reamin top performer in terms of GDP growth

* Price situation unlikely to cause concern to macro stability

* Need to remove bottlenecks in credit flow to farm, SMEs

  click here for detailed report of the credit policy 2004-2005