RBI hikes CRR other key rates unchanged!

The RBI Governor, YV Reddy announced the credit policy in Mumbai today.

RBI has hiked the CRR by 50 bps to to 7.5% from 5%. However, the other key rates including the repo and reverse repo rates have remained unchanged.

The bank rate remains unchanged at 6% while the RBI has kept its inflation target for FY08 at 5%. RBI�s GDP forecast too remains unchanged at 8.5%.





The RBI has said that the surplus liquidity needs priority attention. It needs to check bank credit risk from faulty derivative record, it added. Oil companies can hedge forex exposure up to 50% of inventory, it added.



The central bank said that money supply is expanding well above 17-17.5%. There is evidence of stability in real estate prices, it revealed. However, it informed that there are irregularities seen in banks' real-estate exposure.



The RBI has said that 10 banks have high exposure to real estate and stocks, adding that it will continue to manage liquidity through reins like CRR, MSS and LAF (liquidity adjustment facility). RBI said that credit growth is in line with 24-25% target. It confirmed that the credit policy stance has been more hawkish than July; the emphasis being on capital flows.



The Reserve Bank said that that authorized dealers have been allowed to run cross currency options. The total credit growth of 23.3% as on October12 stood at Rs 3.81 lakhs crore, it informed. Managing liquidity arising from forex flows posed a key challenge, it said. The Consumer Price Index (CPI) inflation has been up at 7.3% in August 2007 Vs 6.3% (YoY). The deposit growth is ahead of FY08 target of Rs 4.9 lakhs, the central bank informed.