An announcement made by the RBI after a review of the Indian economy is termed as credit policy. It announces changes in key credit management tools like the bank rate, repo rate, reverse repo rate, SLR and CRR.
In its credit policy, the RBI makes a statement on the country’s economy, expected GDP growth rate in a quarter or a year, the level of inflation that it will be comfortable with, and a host of other things.
As of now the RBI is concerned about inflation, which has breached the 5.5 per cent level, (As of today – 11.8 while writing this article) it was comfortable with. It is in this backdrop that the bankers, stock market punters and economists believe the RBI will hike key indicative rates like the CRR, reverse repo and the bank rate.
The RBI’s decisions will impact banks, the stock markets, economists, various other economic agents and even you and me. It will affect our decision, or how much we have to pay for home loans, two-wheeler loans or personal loans.