RBI to ensure quality and availability of credit

21 April 2009

The Reserve Bank of India said its policy regime would enable credit expansion at viable rates while preserving credit quality so as to support the return of the economy to a high growth path.

''On the basis of the overall assessment, the stance of RBI's monetary policy in 2009-10 will broadly be to ensure continuous monitoring of the global and domestic conditions and respond swiftly and effectively through policy adjustments as warranted so as to minimise the impact of adverse developments and reinforce the impact of positive developments,'' the RBI release said.

The RBI said it would strive to maintain a monetary and interest rate regime that is supportive of price stability and financial stability, taking into account the emerging lessons of the global financial crisis.

Over the last several months, the RBI has been actively engaged in policy action to minimise the impact of the global crisis on India. 

''The policy response of the Reserve Bank has helped in keeping our financial markets functioning in a normal manner and in arresting the growth moderation. The Reserve Bank will continue to maintain vigil, monitor domestic and global developments, and take swift and effective action to minimise the impact of the crisis and restore the economy to a high growth path consistent with price and financial stability,'' it said.
 
RBI's annual policy statement for 2009-10 is set in the context of the the global economic crisis challenging several fundamental assumptions and beliefs governing economic resilience and financial stability. What started off as turmoil in the financial sector of the advanced economies has snowballed into the deepest and most widespread financial and economic crisis of the last 60 years.

''With all the advanced economies in a synchronised recession, global GDP is projected to contract for the first time since the World War II, anywhere between 0.5 and 1.0 per cent, according to the March 2009 forecast of the International Monetary Fund.''