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RBI Q2 monetary policy review: Key Highlights

Last Updated: Tuesday, October 29, 2013 - 12:21

Mumbai: Reserve Bank to continue its firm stance and hike the short-term lending (repo) rate by 0.25 per cent, a step that will make corporate and consumer loans more expensive. Following are the highlights of the RBI's second quarter review of monetary policy 2013-14:

* Repo or short-term lending rate up by 0.25 pc to 7.75 percent;

* Cash reserve ratio unchanged at 4 percent

* Marginal standing facility (MSF) rate cut by 0.25 pc to 8.75 percent

* Difference between repo and MSF rate narrows to 1 percent

* Repo hiked due to upturn of inflation, other factors.

* Wholesale inflation expected to be higher than current levels; warrants 'appropriate policy response'

* Retail inflation to hover around 9 percent

* Food price pressures may ease with the arrival of summer crop harvest and seasonal moderation.

* Prospect of delay in taper of US Fed Reserve's bond purchases has brought calm to financial markets

* Normalcy will restored in the forex market only when OMCs fully return to the market for their

* FY14 GDP growth estimate revised downward to 5 pc vs 5.7 percent

* Growth likely to pick up in second half on good show in exports and agriculture

* Liquidity pressures building on small businesses as large entities holding on payments; remedies
lie in speeding-up of Government and PSU payments.

* Average drawdown from MSF has declined to Rs 0.4 trillion by mid-Oct, down from a high of Rs 1.4
trillion in mid-Sep

* Final guidelines on unhedged forex exposures by corporates to be out by December

* Jalan panel on new bank licenses to hold 1st meet on Nov 1, decision of RBI on in-principle approvals will be final.

First Published: Tuesday, October 29, 2013 - 12:21
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