Following are the highlights of the Credit Policy 2003-04 announced by Reserve Bank of India governor Bimal Jalan in Mumbai on Tuesday.
CRR: Cash Reserve Ratio, the fortnightly cash balances maintained by commercial banks with the central bank.
Bank Rate: Bank Rate is the rate at which RBI allows finance to commercial banks. Normally, different types of refinance facilities by RBI to banks are linked to a Bank Rate. Bank Rate is a tool which RBI uses for short-term purposes. Any revision in Bank Rate by RBI is a signal to banks to revise deposit rates as well as Prime Lending Rate.
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.
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.