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RBI holds rates steady
Tuesday, April 24, 2007
HIGHLIGHTS
Bank of
REPO RATE: Unchanged at 7.75 percent.
REVERSE REPO RATE: Unchanged at 6.00 percent.
BANK RATE: Unchanged at 6.00 percent.
CASH RESERVE RATIO: No change beyond previously announced increase to 6.50 percent that is effective from April 28.
RBI'S MONETARY POLICY STANCE:
- To reinforce the emphasis on price stability and well-anchored inflation expectations while ensuring a monetary and interest rate environment that supports export and investment
demand in the economy so as to enable continuation of the growth momentum.
- To re-emphasise credit quality and orderly conditions in financial markets for securing macroeconomic and, in particular, financial stability while simultaneously pursuing greater credit penetration and financial inclusion.
- To respond swiftly with all possible measures as appropriate to the evolving global and domestic situation impinging on inflation expectations and the growth momentum.
EXTERNAL COMMERCIAL BORROWINGS: Proposed to allow corporates
to repay ahead of schedule ECBs up to $400 million, compared with existing limit of $300 million, by authorised dealers without prior approval of Reserve Bank.
OVERSEAS INVESTMENT LIMIT: Proposed to increase the overseas investment limit for Indian companies to 300 percent of their net worth from 200 percent, based on their last audited balance sheet.
PORTFOLIO INVESTMENT OVERSEAS: Decided to increase the limit for Indian listed companies to 35 percent of net worth from 25 percent for portfolio investment abroad in listed foreign companies.
OVERSEAS INVESTMENT BY MUTUAL FUNDS: Proposed to increase aggregate ceiling on overseas investment by mutual funds to $4 billion from $3 billion.
INTEREST RATE ON FCNR (B) DEPOSITS: Interest rate ceiling on foreign currency non-resident (banks) deposits reduced by 50 basis points to LIBOR minus 75 basis points with immediate effect.
INTEREST RATE NR(E)RA DEPOSITS: Interest rate ceiling on non-resident (external) rupee accounts for one- to three-year maturity reduced by 50 basis points to LIBOR/SWAP rates with immediate effect.
RESIDENTIAL HOUSING LOANS: Risk weight reduced to 50 percent from 75 percent as a temporary measure for loans up to 2 million rupees.
