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RBI keeps bank rate, CRR unchanged
By agencies
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Thursday, 28 April 2005, 19:30 IST
MUMBAI: The Reserve Bank of India today kept the bank rate unchanged at 6 percent.
The central bank also maintained the Cash Reserve Ratio (CRR) steady at 5 percent in its annual policy for 2005-06. The RBI also expects the economy to grow at 7 percent in 2005-06.
The inflation rate for the current fiscal is estimated to be in the range of 5-5.5 percent, RBI Governor Y V Reddy said while addressing the bankers.
Agricultural growth is likely to be 3 percent and industry and services sectors are expected to continue the current growth momentum while absorbing the impact of oil prices.
The monetary policy will aim to provide liquidity for credit growth and support investments along with emphasis on price stability, Reddy said.
He said the focus would be on financial stability and stabilizing inflationary expectations. On the repo rate, he said the fixed reverse repo rate would be raised by 0.25 percent to 5 percent.
The RBI, starting this financial year, will also conduct quarterly review in July and January. The mid-term review will be carried on October 25.
Reddy said it was desirable to keep the CRR rate unchanged following the review of the current liquidity situation though the bank would continue to pursue the mid-term objective of reducing the CRR to minimum statutory level of three percent.
On credit flow to medium enterprises, he said there was an urgent need to upgrade technology of small-scale industries (SSI). The central bank would explore modalities to meet their growing financial needs.
A simplified debt restructuring and rehabilitation mechanism is also being considered for the sector, he added.
Reddy also said the Credit Information Bureau of India Ltd is working out a solution that would provide credit reports on SSIs.
The RBI is reviewing all its existing guidelines on financing small-scale sector, debt restructuring, nursing of sick units with a view to rationalizing, consolidating and liberalizing them, he added.