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Home > Money > Monetary & Credit Policy 2000-2001
October 10, 2000 		Feedback  
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Credit Policy highlights

The following are the highlights of the Reserve Bank of India's mid-term review of the Monetary and Credit policy for 2000-01.

  • No changes in the monetary policy measures such as Bank Rate and Cash Reserve Ratio.
  • RBI expects interest rate environment to remain stable, as per current indications.
  • RBI to ensure adequate availability of liquidity and credit to support growth.
  • Money supply growth, reserve money and government borrowing are on a trajectory, RBI urges a strong framework to build up positive expectations on the fiscal front.
  • LAF (Liquidity Adjustment Facility) will continue to be operated in a flexible manner.
  • New guidelines for bank's participation in capital market.
  • New norms for valuation of banks' investments.
  • EEFC (Exchange Earners' Foreign Currency Account) facility of earlier entitlements of 70 per cent and 50 per cent on export related payments and reduction of transaction costs respectively to continue.
  • Much greater flexibility to corporates for raising resources through commercial paper, transferability of CDs (certificate of deposits) made easier.
  • Measures to improve credit delivery mechanisms, technology upgradation, further deregulation and rationalisation of procedures.

SLR = statutory liquidity ratio. Banks in India are required to maintain 25 per cent of their demand and time liabilities in government securities and certain approved securities. These are collectively known as SLR securities. The buying and selling of these securities was the seed of the 1992 scam.

CRR = cash reserve ratio, the fortnightly cash balances maintained by commercial banks with the central bank.

FCNR(B) deposits. (foreign currency non resident Indian - banking deposits.)

FCNR (foreign currency non resident Indian).

M1: A measure of money supply that includes all coins and notes in circulation, and personal current accounts. M3: A measure of money supply, including those covered by M2 -- a measure of money, supply, including M1, plus personal deposit accounts -- plus government deposits and deposits in currencies other than rupee.

Repo: repurchase agreements or ready forward deals, a secured short-term -- usually 15-day -- loan by one bank to another against government securities. Legally, the borrower sells the securities to the lending bank for cash, with the stipulation that at the end of the borrowing term it will buy back the securities at a slightly higher price, the difference in price representing the interest.

SEE ALSO:

Monetary & Credit Policy 2000-2001 (Second Half)

RBI's Credit and Monetary Policy 2000-2001 (First Half)

RBI's Credit and Monetary Policy 1999-2000

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