Monetary and liquidity conditions have eased so far in 2012-13 after the Reserve Bank of India slashed policy rates by 50 basis points and cash reserve ratio or the portion of total deposits banks need to keep with the regulator, by 125 bps. Moreover, the frequent open market operations wherein RBI bought back bonds, too injected liquidity into the system, said the central bank’s review report on the macroeconomic monetary development for April-June quarter.
The daily net borrowing by banks through RBI liquidity adjustment facility (LAF) has been hovering in the range of Rs 40,000-50,000 crore in the last couple of months as against Rs 1 lakh crore on an average.
“Though there has been some rise in nominal and real interest rates during 2011-12, computed real weighted average lending rates (WALR) are currently significantly lower than the pre-crisis period of 2003-04 to 2007-08 when the investment boom took place,” RBI said.
“While the rate of deposit expansion is slow, credit growth has picked up in the current financial year in line with the indicative projection. The flow of resources from non-bank sources has also been good.”