Important Monetary and Credit Policy Measures Announced on March 1, 1999 - ಆರ್ಬಿಐ - Reserve Bank of India
Important Monetary and Credit Policy Measures Announced on March 1, 1999
BANK RATE |
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It has been decided that with effect from the close of business of March 1, 1999, the Bank Rate |
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will be reduced by one percentage point from '9.0 per cent per annum' to '8.0 per cent per annum'. |
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As a consequence to this change, the interest rates on Special Liquidity Support and General |
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Refinance facility to banks and liquidity support to Primary Dealers against the security of holdings in Subsidiary General Ledger Accounts are being reduced by one percentage point. Penal interest rates on shortfalls in reserve requirements also stand revised (vide Annexure). |
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Annexure |
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Interest Rates on Advances from Reserve Bank and Penal Rates which are at present Linked to the Bank Rate |
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Sr. |
Advances to |
Existing Rates |
New Rates |
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No. |
(Effective close of |
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business on |
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March 1, 1999 |
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(Per cent per annum) |
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1. |
Scheduled Commercial Banks |
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i) |
Export Credit |
Bank Rate minus 2 |
Bank Rate minus 1 |
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Refinance Facility |
percentage points (7.0) |
percentage point* (7.0) |
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ii) |
General Refinance Facility |
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(a) First Four Weeks |
Bank Rate (9.0) |
Bank Rate (8.0) |
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(b) Second Four Weeks |
Bank Rate plus one |
Bank Rate plus 1 |
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percentage point (10.0) |
percentage point (9.0) |
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iii) |
Special Liquidity Support Facility1 |
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(a) First Four Weeks |
Bank Rate (9.0) |
Bank Rate (8.0) |
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(b) Second Four Weeks |
Bank Rate plus one |
Bank Rate plus 1 |
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percentage point (10.0) |
percentage point (9.0) |
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2. |
State Co-operative Banks (SCBs) |
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Towards general banking business such |
Bank Rate plus 2.5 |
Bank Rate plus 2.5 |
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as clearing adjustments, Liquidity, etc. |
percentage points (11.5) |
percentage points (10.5) |
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3. |
NABARD |
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General Line of Credit (GLC) |
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i) |
GLCI |
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To provided Refinance in respect of |
Bank Rate minus 4.5 |
Bank Rate minus |
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loans and advances for the |
percentage points (4.5) |
3.5 percentage |
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purposes of Seasonal Agricultural |
points (4.5) |
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Operations (SAO) made by SCBs |
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and Regional Rural Bank (RRBs) |
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ii) |
GLCII |
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To provide refinance to SBCs, |
Bank Rate minus |
Bank Rate minus |
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RRBs and Commercial banks |
4.0 percentage |
3.0 percentage |
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for refinancing Weavers' Co-op. |
points |
points |
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society and for other approved |
(5.0) |
(5.0) |
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short-term purposes |
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4. |
Primary (Urban) Co-op. Banks |
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i) |
Export Credit Refinance Facility |
Bank Rate minus 2 |
Bank Rate minus 1 |
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percentage points (7.0) |
percentage point* (7.0) |
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ii) |
For SSI |
Bank Rate (9.0) |
Bank Rate (8.0) |
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5. |
SIDBI [from NIC (LTO) Fund out of | Bank Rate minus 0.5 |
Bank Rate (8.0) |
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The Loan Repayment made by IDBI] |
percentage points (8.5) |
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6. |
Primary Dealers (PDs) |
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To enable PDs to effectively fulfill their |
Bank Rate |
Bank Rate |
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obligations, the RBI is extending |
(9.0) |
(8.0) |
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liquidity support to them against the |
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security of holdings in Subsidiary |
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General Ledger (SGL) Accounts |
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7. |
State Financial Corporations |
Bank Rate (9.0) |
Bank Rate (8.0) |
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8. |
Government of India |
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a) |
Shortfall in minimum balances |
Bank Rate (9.0) |
Bank Rate (8.0) |
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b) |
Ways and Means Advances |
Bank Rate (9.0) |
Bank Rate (8.0) |
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c) |
Overdraft |
Bank Rate plus 2.0 |
Bank Rate plus 2.0 |
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percentage point (11.0) |
percentage point (11.0) |
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9. |
State Governments |
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a) |
Shortfall in minimum balances |
Bank Rate (9.0) |
Bank Rate (8.0) |
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b) |
Ways and Means Advances |
Bank Rate (9.0) |
Bank Rate (8.0) |
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c) |
Overdraft |
Bank Rate plus 2.0 |
Bank Rate plus 2.0 |
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percentage points (11.0) |
percentage points (10.0) |
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Penal Interest Rates on shortfalls in |
Bank Rate plus 3 |
Bank Rate plus 3 |
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reserve requirements depending on |
percentage points (12.0) |
percentage points |
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duration of shortfall |
or Bank Rate plus 5 |
(11.0) or Bank Rate |
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percentage points |
plus 5 percentage |
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(14.0) |
points (13.0) |
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* |
Effective from April 1, 1999, export credit refinance will be provided at the Bank Rate. |
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1. |
This facility will remain in force upto March 31, 1999. |
Interest Rates on Export Credit and Export Credit Refinance |
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Consequent to the reduction in the Bank Rate from 9.0 per cent per annum to 8.0 per cent per |
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annum effective from the close of business on March 1, 1999, the scheduled commercial Banks will be provided export credit refinance at 1.0 percentage point below the Bank Rate (i.e., 7.0 per cent per annum the same rate as at present) which will be applicable upto March 31, 1999. With effect from April 1, 1999, export credit refinance will be provided to scheduled commercial banks at the Bank Rate. |
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Upto March 31, 1999, existing interest rates on export credit prevailing from August 6, 1998 |
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will remain in force. |
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With effect from April 1, 1999 the interest rates on export credit will stand revised. The existing |
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interest rates on export credit, the interest rates originally scheduled to be effective from April 1, 1999 and the revised interest rates which will be applicable on export credit from April 1, 1999 are set out in the Annexure. |
Annexure |
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Interest Rates on Export Credit of Scheduled Commercial Banks |
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(Per cent per annum) |
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Interest Rates |
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Existing upto |
(Effective April 1, 1999) |
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March 31, 1999 |
Originally |
Now |
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scheduled |
Revised |
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1. |
Pre-Shipment Credit |
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a) |
(i) |
Upto 180 days |
9.0 |
11.0 |
10.0 |
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(ii) |
Beyond 180 days and upto |
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270 days |
12.0 |
14.0 |
13.0 |
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b) |
Against incentives receivable from |
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Government covered by ECGC |
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guarantee upto 90 days |
9.0 |
11.0 |
10.0 |
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2. |
Post-Shipment Credit |
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a) |
on demand bills for transit |
9.0 |
'Not exceeding |
'Not exceeding |
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period (as specified by FEDAI) |
11.0' |
10.0' |
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b) |
Usance Bills (for total period |
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comprising usance period of export |
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bills, transit period as specified by |
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FEDAI and grace period wherever |
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applicable) |
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(i) |
Upto 90 days |
9.0 |
'Not exceeding |
'Not exceeding |
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11.0' |
10.0' |
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ii) |
Beyond 90 days and upto 6 months |
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from the date of shipment |
11.0 |
13.0 |
12.0 |
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b) |
Against incentives receivable from |
9.0 |
'Not |
'Not |
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Government covered by ECGC |
exceeding |
exceeding |
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guarantee upto 90 days |
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11.0 |
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10.0 |
Cash Reserve Ratio (CRR) |
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Under Section 42 (1) of the Reserve bank of India Act, 1934 all scheduled commercial banks |
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[excluding Regional Rural Banks (RRBs)] are, at present, required to maintain with the Reserve Bank of India a Cash Reserve Ratio (CRR) of 11.0 per cent of the Net Demand and Time Liabilities (NDTL) (excluding liabilities subject to Zero CRR prescription). It has been decided to reduce CRR by one half of one percentage point. Accordingly, effective from the fortnight beginning March 13, 1999, the CRR to be maintained by scheduled commercial banks (excluding RRBs) is being reduced from 11.0 per cent to 10.5 per cent of NDTL. As a result of 0.50 per cent reduction in CRR, the resources of banks would be augmented by about Rs. 3,100 crore. |