The following are the highlights of the RBI's second quarter review of monetary policy, unveiled by Governor D Subbarao on Tuesday:
Rates:
- Raises statutory liquidity ratio by 100 bps to 25%
- Keeps other key rates unchanged
- Repo rate retained at 4.75%; reverse repo at 3.25%
- Cash Reserve Ratio kept at 5%
- Bank Rates same at 6%
- Provisioning requirement for realty up at 1% from 0.40%
Growth:
- Retains GDP growth projection for FY'10 at 6%
- Weak monsoon can impact overall economic prospects
- Poor farm output may affect industrial and services sectors
- Industrial production may revive further in coming months
- Growth in trade-related services such as cargo decelerating
- Domestic services communication, construction turning up
- Direct impact of fiscal stimulus waning
- Indirect impact will persist for some more time
- External demand remains weak, hitting exports.
Inflation:
- Ups inflation projection to 6.5% pc by March-end, from 5%
- Aims to contain inflation at 4-4.5%
- Prices of food items risen due to short supply
- Large increase seen in prices of vegetables, sugar, etc
- Asset prices like stocks, realty, commodity have risen sharply
Others:
- Managing large govt borrowings a major challenge for RBI
- Non-food bank credit declines sharply
- Non-bank credit to commercial sector turning around
- Credit flow to agri, real estate, NBFCs remain high.
- Credit flow to housing low
- To announce third quarterly review in January.
