The absence of any specific measure to increase the total credit flow is in conformity with the absence of any measure to make an impact on the liquidity in the system, says Dr. N Nagarajan, Chief Economist, Indian Banks' Association.
On November 3, 2003, Dr.Yaga Venugopal Reddy, Governor, Reserve Bank of India (RBI), announced his maiden monetary and credit policy. The policy statement and the measures have been receiving all round acclaim. In this article, we examine the rationale of the measures and their implication against the backdrop of the objectives of monetary and credit policy for 2003-04, as enunciated by the RBI itself.
All
measures having a direct impact on the quantity and
cost of money are included under this head. They are:
Bank Rate, Cash Reserve Ratio (CRR), and the Repo Rate.
All these rates and ratio are left unchanged at their
historic low levels. The bank rate at 6.0% is the lowest
in the last 30 years. Similarly, the cash reserve ratio
at 4.5% is the lowest in 40 years. The repo rate at
4.5% is also the lowest since the establishment of this
facility in 2000. |
