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April 27, 2000

CREDIT POLICY 2000
BUDGET 2000
EXIM POLICY 2000

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Highlights of Monetary and Credit Policy

India's central bank, the Reserve Bank of India

  • No fresh changes in bank rate, CRR.
  • Minimum daily CRR balances requirement cut to 65%.
  • Banks given freedom to fix interest rates.
  • Focus on making debt and money markets efficient.
  • GDP growth put at 6.5%-7% for 2000-2001.
  • Inflation rate estimated at 4.5%.
  • Money supply (M3) growth projected at 15%.
  • Non-food credit growth projected to grow at 16%.
  • "Bank rate, repo rate, rate on savings accounts not too out of line with ruling international rates," says Bimal Jalan
  • Liquidity Adjustment Facility to replace Interim Liquidity Adjustment Facility. The LAF will include repo auctions and reverse repo auctions, cementing the RBI's position as the lender of last resort.
  • No change in the export credit refinance scheme.
  • Minimum maturity of Certificates of Deposits cut to 15 days.
  • Scheme for banks, PDs: automatic invocation by the SGL Account holder of undrawn refinance/liquidity support from RBI.
  • Sale of securities allotted in primary issues on the same day.
  • Fresh guidelines for capital adequacy standards for PDs being evolved.
  • Clearing corporation for money and debt securities.
  • Banks will be required to obtain prior approval of RBI for entering insurance.
  • Banks to have freedom to offer all loans on fixed or floating rates.
  • Banks to have option to choose current swap rates while offering FCNR (B) deposits.
  • RBI to continue its current policy of providing sufficient credit for growth while guarding against inflationary pressures.
  • CRR may be cut as when required.
  • Current account deficit expected to be below two per cent of GDP in 2000-2001.
  • Foreign exchange reserves up to $5.55 billion in 1999-00.
  • Banks can undertake insurance business only through joint ventures on risk participation bais. Only banks with minimum net worth of Rs 5 billion can take up insurance ventures.
  • RBI keen to promote self-regulation among small NBFCs and further improve disclosure requirements.
  • Scope of participation in the repo market widened.
  • Day of payment in respect of 14 and 91-day treasury bills' auction changed from Saturday to the next working day.
  • Drought affected areas to be provided maximum support for conversion of short-term production loans into mid-term loans.
  • Financial institutions given flexibility in fixing interest rates on term deposits.
  • Composite loan limit for small scale industries increased from Rs 500,000 to Rs 1 million.
  • Facility to non-bank entities for routing transaction through PDs extended till December 31, 2000.
  • Banks allowed to lend gold to other nominated banks.
  • Banks asked to consolidate capital adequacy.
  • In-principle nod to universal banking.
  • RBI to consider giving financial institutions flexibility to raise funds, subject to overall limits on the net-owned funds.
  • Banks told to boost balance-sheets.
  • RBI hints at move towards international risk-based supervision.
  • Underwriting commission for treasury bills withdrawn.
  • RBI reviewing capital adequacy ration of PDs.
  • Draft guidelines on CP and non-SLR bonds announced.
  • Pure inter-bank market to be operational by end-December 2000.

    ALSO SEE

    RBI Governor Bimal Jalan's policy statement

    RBI's Credit and Monetary Policy 2000-2001

    RBI's Credit and Monetary Policy 1999-2000

    RBI's Credit and Monetary Policy 1998-1999

    Business

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