The Tribune, Chandigarh, India

Tuesday, April 30, 2002, Chandigarh, India

THE TRIBUNE SPECIALS

50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

M A I N N E W S

Cut in CRR, bank rate unchanged

Highlights

* 2002-03 GDP growth projected at 6.0-6.5 per cent
* Cash reserve ratio (CRR) reduced by 50 basis points to 5.00 per cent effective from fortnight June 15
* Bank rate may be cut up to 50 basis points depending on monetary development, no timing fixed
* No change in interest rate on savings account
* Investment norms for funds mobilised under FCNR(B) deposits liberalised.
* Interest rate ceiling on FCNR (B) deposits lowered to Libor/Swap minus 25 basis points
* Banks allowed to increase the limit of dispensation of collateral requirements for SSI loans to Rs 15 lakh from Rs 5 lakh.
* Banks to assign risk rate of 50 per cent instead of present 100 per cent on loans against residential properties.

Mumbai, April 29
A reduction of 0.5 percentage point in cash reserve ratio (CRR) to infuse an additional liquidity of Rs 5,000 crore combined with several prudential measures to make the bank credit attractive to the borrowers at competitive rates were among the major decisions announced by the Reserve Bank of India (RBI) in its annual monetary and credit policy today.

Presenting the policy statement in a meeting with the chief executives of banks, the RBI Governor, Dr Bimal Jalan, said the present comfortable liquidity condition at low interest rates did not warrant for an immediate reduction in bank rate. However, he assured that a cut in the bank rate by up to half a percentage point from the current level of 6.5 per cent would be considered in future as and when necessary.

There was no change in the interest rates in saving accounts.

Reserve Bank of India Governor Bimal Jalan announcing the Apex Bank's Annual Monetary and Credit Policy 2002-03 in Mumbai on Monday. Along with him are RBI Deputy Governors Vepa Kamesam and Y V Reddy. — PTI photo

Expressing confidence over the recovery of the Indian economy, he said that the real gross domestic product (GDP) is expected to grow at 6 to 6.5 per cent in the year 2002-03 following a likely recovery in industrial production along with the agriculture sector. In 2001-02, a robust growth of 5.7 per cent in the agriculture had boosted the GDP to around 5.4 per cent from 4 per cent in the previous year.

For the current financial year, the RBI placed the fiscal deficit at 5.3 per cent of the GDP while the gross market borrowing programme of the Centre would be around Rs 1,42,867 crore. In this respect, Dr Jalan reiterated the urgent need to contain fiscal deficit in order to improve the task of monetary and debt management from a medium term perspective. UNI