(a) whether the Reserve Bank of India has recently announced a new credit policy;
(b) if so, the objectives thereof and details of the changes made therein as compared to the previous policy; and
(c) the likely impact of the new policy on the economic sector?
Finance Minister (Shri Yashwant Sinha)
(a), (b) and (c): A statement is laid on the Table of the House.
STATEMENT LAID ON THE TABLE OF THE LOK SABHA IN REPLY TO PARTS
(a) TO (c) OF THE LOK SABHA STARRED QUESTION NO.+ 296 FOR
ANSWER ON 16TH MARCH, 2001 RAISED BY SHRI JAIBHAN SINGH
PAWAIYA AND SHRI SHIVRAJ SINGH CHOUHAN REGARDING NEW CREDIT POLICY OF RBI.
(a) & (b) As per the existing practice, the Reserve Bank of
India (RBI ) announces its annual Monetary and Credit Policy
in April and the Mid-Term Review of the policy in October.
The Monetary and Credit Policy for 2000-01 was announced on
April 27, 2000 while the Mid-Term Review of this Policy was
announced on October 10, 2000. The new credit policy referred
to in the question therefore relates to 2001-02 , which is
expected in April 2001. However, keeping in view the developments
in domestic and international financial markets, the Reserve
Bank of India (RBI) undertakes
appropriate monetary and credit policy measures from time to
time. Thus, after a review of the recent developments in
domestic and international financial markets, the RBI took
the following measures on February 16 and March 1,2001.
February 16,2001
(i) Reduction in Bank Rate from 8 percent to 7.5 percent
with effect from February 17, 2001 .
(ii) Reduction in Cash Reserve Ratio (CRR) from 8.50 percent
to 8.25 percent with effect from the fortnight beginning
February 24, 2001 and to 8.00 percent with effect from the
fortnight beginning March 10, 2001.
March 1,2001
Reduction in Bank Rate from 7.5 percent to 7.0 percent with
effect from March 2, 2001.
(c) In response to the reduction in Bank Rate, a number of
banks have announced reduction in their Prime Lending Rates
(PLRs) . The reduction in CRR from 8.5 percent to 8 percent
increased lendable resources of banks by about Rs. 4100 crore.
The softening of interest rates , facilitated by reduction
in cost of funds and increase in liquidity , is expected
to reduce cost of production and thereby contribute to
economic growth.