Important Events

Mid-term review of Monetory Policy 2006-07 No change in bank rate, CRR and Reverse Repo rate. Repo rate (the rate at which RBI lends money to banks) increased to 7.25% from 7%. Resident individuals would be free to remit upto US$50,000 per financial year as against the earlier limit of US$25,000. The present facility of $10,000 per year for private travel will continue on a self-declaration basis. All Foreign exchange earners may retain upto 100% of their foreign exchange earnings in their Exchange Earners' Foreign Currency Accounts (EEFC). GDP growth forecast at around 8% during 2006-07. Inflation to be contained within 5 to 5.5% during 2006-07 Banks can borrow from their overseas branches and correspondent banks upto 50% of their unimpaired Tier-I capital or $10 million, whichever is higher, as against the earlier limit of 25% . This includes borrowings for financing export credit, ECBs and overdrafts from their head office or nostro accounts. The earlier limit of 25% was excluding borrowing for export credit now this has also been caped. Corporates can raise an extra $250 million in external commercial borrowings (ECB) over the existing limit of $500 million under the automatic route, in a financial year Prepayment of ECBs upto $300 million (earlier cap of $250 million) without reference to the central bank has also been okayed. To help indian companies move abroad, the RBI has lifted the limit on credit and non-credit facilities extended by banks from 10% to 20% of their unimpaired capital. Mutual funds can now invest $3 billion (earlier $2 billion) overseas.