RBI - Second Quarter Review of Monetary Policy 2012-13

RBI - Second Quarter Review of Monetary Policy 2012-13

Cash Reserve Ratio

·       RBI has decided to reduce the cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.5% to 4.25% of their net demand and time liabilities (NDTL) effective the fortnight beginning November 3, 2012.

·       As a result of this reduction in the CRR, around `175 billion of primary liquidity will be injected into the banking system.

Repo Rate

The policy repo rate under the liquidity adjustment facility (LAF) has been retained at 8%.

Reverse Repo Rate

The reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands at 7%.

Marginal Standing Facility (MSF) Rate

The Marginal Standing Facility (MSF) rate, determined with a spread of 100 basis points above the repo rate, stands at 9%.

Bank Rate

The Bank Rate stands at 9%.

Domestic Outlook

Growth

·       In its April 2012 Policy, the Reserve Bank projected GDP growth for 2012-13 at 7.3%. In the First Quarter Review of July, this was revised downwards to 6.5%.

·       The Central Bank has now revised the baseline projection of GDP growth for 2012-13 downwards to 5.8%.

 

                                                                                                                                                

Inflation

The baseline projection for headline WPI inflation for March 2013 is raised to 7.5% from 7%.

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