The central bank has cut the GDP growth forecast to 5.5% from 5.7% for FY14.
The Reserve Bank at its Monetary Policy meet on Tuesday has left the repo rate unchanged 7.25%.
On the rupee front, the central bank said it will roll back tightening steps as the rupee steadies.
With the rupee hurtling towards 60 to the dollar and growth slowing, the apex bank’s hands were tied.
On July 23, RBI announced additional liquidity tightening measures to contain excessive speculation and volatility in the foreign exchange market. It reduced the liquidity adjustment facility for each bank from 1% of total deposits to 0.5% of its own net demand and time liabilities, thus limiting bank's access to borrowed funds. The limit will come into force with immediate effect and continue till further notice.
In another measure, it asked banks to maintain their average cash reserve ratio at 99% of the daily requirement as against earlier 70%. This measure would come into effect after a fortnight.
On July 15, the RBI unleashed a surprise 200 bps hike in the Marginal Standing Facility besides imposing an overall cap of Rs. 750bn for LAF borrowing. MSF is used by banks, with no excess government securities, to borrow under RBI's LAF window at a penal rate which is higher than the prevailing repo rate.
It has also made gold imports for domestic consumption tougher and forced exporters to bring home their dollar earnings quicker. RBI said banks and other entities allowed to import gold should ensure that at least one-fifth of it is used for further exports. The rest can be used in the domestic market but only for jewellery making. This effectively means hoarding of gold in its raw form such as in bars and coins won’t be allowed.
The Reserve Bank at its Monetary Policy meet on Tuesday has left the repo rate unchanged 7.25%.On the rupee front, the central bank said it will roll back tightening steps as the rupee steadies.
With the rupee hurtling towards 60 to the dollar and growth slowing, the apex bank’s hands were tied.
On July 23, RBI announced additional liquidity tightening measures to contain excessive speculation and volatility in the foreign exchange market. It reduced the liquidity adjustment facility for each bank from 1% of total deposits to 0.5% of its own net demand and time liabilities, thus limiting bank's access to borrowed funds. The limit will come into force with immediate effect and continue till further notice.
In another measure, it asked banks to maintain their average cash reserve ratio at 99% of the daily requirement as against earlier 70%. This measure would come into effect after a fortnight.
On July 15, the RBI unleashed a surprise 200 bps hike in the Marginal Standing Facility besides imposing an overall cap of Rs. 750bn for LAF borrowing. MSF is used by banks, with no excess government securities, to borrow under RBI's LAF window at a penal rate which is higher than the prevailing repo rate.
It has also made gold imports for domestic consumption tougher and forced exporters to bring home their dollar earnings quicker. RBI said banks and other entities allowed to import gold should ensure that at least one-fifth of it is used for further exports. The rest can be used in the domestic market but only for jewellery making. This effectively means hoarding of gold in its raw form such as in bars and coins won’t be allowed.
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