RBI hikes export credit refinance rate to 5 per cent
22 Mar 2010
The Reserve Bank of India (RBI) today said the standing liquidity facilities provided to banks (export credit refinance) and primary dealers (PDs) under the collateralised liquidity support would be at the revised repo rate, ie, 5.0 per cent with effect from 20 March 2010.
The RBI had, in its monetary policy announcement on 19 March, had increased the fixed repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 4.75 per cent to 5.0 per cent with immediate effect.
The RBI, while announcing its monetary policy measures, had said that there had been significant macroeconomic developments since the third quarter review in January 2010.
Advance estimates by the CSO for 2009-10 and for Q3 of 2009-10 suggest that the recovery is consolidating, RBI noted. Data on industrial production currently available up to January 2010 show that the uptrend is being maintained.
The manufacturing sector, in particular, has recorded robust growth. The sharp acceleration in the growth of the capital goods sector points to the revival of investment activity.
After contracting for 13 straight months, exports have expanded since November 2009. That the recovery is gaining momentum is also evident from the sustained increase in bank credit and the resources raised by the commercial sector from non-bank sources.
Even as this is happening against the backdrop of improving global conditions, recent real GDP and industrial production clearly suggest that the positive trend is predominantly due to domestic factors, RBI noted in its monetary policy.