Mumbai: The Reserve Bank of India (RBI) today (Oct 26, 2004) kept the bank rate untouched at six per cent but raised the Repo rate by 0.25 per cent to 4.75 per cent effective from tomorrow.

The economic growth for the current fiscal has been scaled down to 6-6.5 per cent from 6.5-7 per cent, RBI said in its mid-term review of annual policy in Mumbai today. The inflation estimate has been raised sharply to 6.5 per cent from the earlier estimate of five per cent.

In its mid-term policy review, RBI said it would pursue an interest rate environment that is conducive to macro-economic growth and price stability and maintaining the momentum of growth. The overall stance of monetary policy for 2004-05 would be provision of appropriate liquidity to meet credit growth and support investment and export demand in economy while placing equal emphasis on price stability. RBI would consider the monetary policy measures in a calibrated manner, in response to evolving circumstances with a view to stabilising inflationary expectations.

RBI said banks have been allowed to fix the ceiling on the interest rates on FCNR (B) deposits on a monthly basis.

The minimum tenor of the retail domestic term deposits reduced to seven days, it added.

The limits on advances under priority sector enhanced from improving credit delivery to the agriculture sector, RBI said.