Highlights of the RBI credit policy

Mumbai: Following are key points from the Reserve Bank of India's (RBI) annual policy statement released on Tuesday.

The Reserve Bank of India left its key short-term rates and cash reserve requirement unchanged.

• REPO RATE: Left unchanged at 4.75 per cent. This is the rate at which the central bank lends funds to the money market.
• REVERSE REPO RATE: Unchanged at 3.25 per cent. This is the rate at which the central bank absorbs funds from the market. It impacts government bond yields and short-term bank deposits.
• BANK RATE: Unchanged at 6.00 per cent. Banks use this rate to price their long-term loans to individuals and companies.
• CASH RESERVE RATIO (CRR): Unchanged at 5.00 per cent. The CRR is the percentage of banks' deposits which they must keep as cash with the central bank.
• GROWTH FORECAST: Expects 2009/10 growth of 6.0 per cent, with an upward bias.
• INFLATION AIM: Revises up wholesale price inflation forecast to around 5.0 per cent from 4.0 per cent by end March 2010.
• MONEY SUPPLY: Growth seen at 18 percent in 2009/10. Deposits of commercial banks projected to grow 19 percent. Non-food credit growth seen at 20 percent in 2009/10.

POLICY STANCE

• Manage liquidity actively so that the credit demand of the government is met while ensuring the flow of credit to the private sector at viable rates.
• Keep a vigil on the trends and signals of inflation, and be prepared to respond quickly and effectively through policy adjustments.
• Maintain a monetary and interest rate regime consistent with price stability and financial stability supportive of returning the economy to the high growth path.