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