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Monetary and Credit Policy for 2002-03 Unveiled by RBI

Governor, Reserve Bank of India announced on 29 April, 2002 the monetary and credit policy for the year 2002-03, relevant features of which are indicated below :

i.

bank rate kept unchanged at 6.5%; but it could be cut 50 basis points if inflation rate continues to remain low.

cash reserve ratio (CRR) reduced from 5.5% to 5.0% from June 15, 2002, date may be advanced if the situation so warrants.

banks asked to declare their maximum and minimum lending rates and to reduce spreads over prime lending rate (PLR).   

iv.  

interest rate on export credit in foreign currency lowered to LIBOR plus 0.75% from LIBOR plus 1%.

interest rates on both preshipment and postshipment export credit in repee terms at 2.5% below PLR of the banks will be applicable upto September 30, 2002 in place of March 31, 2002.  With this

concession and facility to sell export earnings in the forward market, taking into account forward premia, effective interest cost to exporters stands at an internationally competitive rate.

for small scale units, banks may, on the basis of good track record of the units and their financial position, raise the limit for

non-collaterised loans to Rs. 15 lakh from Rs. 5 lakh at present.

banks advised to introduce inflation-linked flexible interest rate system (with a fixed rate option also) with reset at 6-monthly intervals for depositors.

minimum lending rate abolished for cooperative banks.

(Source : Excerpts from the published statement of Governor, RBI) 

According to a notification issued by the Central board of Direct Taxes, purchase of bank drafts, pay orders and bankers cheques for amounts exceeding Rs. 50,000/- in cash during one day could be allowed provided PAN (Permanent Account Number) is quoted.  Similarly, cash deposits of more than Rs. 50,000/- during a day could be accepted only if customer's PAN is quoted in the transaction documents.  Quoting of PAN has also been made compulsory in case of cash payments for foreign travel exceeding Rs. 25,000/- at one time and sale/purchase of securities exceeding Rs. 1 lakh.  Quoting of PAN is already compulsory for opening bank accounts and real estate transactions.

Source : Press report

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