Monetary policy review
The Reserve Bank of India (RBI) has kept the key interest rates, like the reverse repo rate, the repo rate and the bank rate, as well as the cash reserve ratio (CRR) unchanged in its Annual Monetary Policy for the year 2007-08. The policy is in line with our expectations. It continues to remain focused on maintaining price stability and anchoring inflation. However the importance of growth is once again visible in the RBI's statements and that is the key positive takeaway from this policy. The salient features of the policy are given below.
- The reverse repo rate and the repo rate have been kept unchanged at 6% and 7.75% respectively.
- The bank rate has been kept unchanged at 6%.
- The CRR has been kept unchanged at 6.5%.
- The risk weightage on residential housing loans has been reduced to 50% from 75% for home loans up to Rs20 lakh.
- The non-resident Indian deposit rate on foreign currency non-resident bank deposits and non-resident (external) rupee account deposits has been reduced by 50 basis points as per expectations. However the apex bank has made capital account outflows more relaxed for all categories, from corporates to individuals.