Friday, June 17 2005 13:10 Hrs (IST) - World Time -

New Delhi: Reserve Bank of India (RBI) today (Jun 17, 2005) stuck to its monetary policy stance of 7 per cent growth projection despite the delay in monsoon.

"There is no change in monetary policy stance as such," RBI Deputy Governor Shyamala Gopinath said when asked about the effect of delayed monsoon on the economy.

In its April credit policy, RBI had forecast 7 per cent growth for this fiscal backed by a modest 3 per cent growth in farm output and sustained growth of over 8 per cent in industry and services sectors. The economy was estimated to grow by 6.9 per cent last fiscal even after a delayed monsoon.

Though RBI has decided to adhere to its stance as spelled out in the slack season credit policy in April 28, the Apex bank would review its policy stance in the busy season credit policy on October 25.

In its April policy, RBI had kept its benchmark lending rate (Bank Rate) unchanged at 6 per cent but raised the reverse repo rate by 0.25 per cent.

Even after the hike in reverse repo rate, there was no upward revision in lending rates of banks and credit has grown by 30 per cent mainly due to excess liquidity.

Gopinath, who was in town to attend the Board of Trade meeting, also dispelled fears of liquidity problems in the near future, which may put pressure on interest rates.

With wholesale price index based inflation coming down to 13-month low of 4.22 per cent, the yield on 10-year Government bonds are now ruling at 6.89 per cent.

However, some of the banks like ICICI Bank and HDFC Bank have raised home loan rates on Thursday signalling an upward movement in lending rates.