The cash reserve ratio has been reduced to nine per cent, a reduction of one percentage point. This is a clear indication from the RBI that it wants interest rates to climb further down. These two measures will release around Rs.8,060 crore worth liquidity into the system Interest rates - The 30 per cent interest rate surcharge on import finance has been done away with. The RBI has also removed the 20 per cent minimum interest rate limit on export bills that are overdue.
Banks are now free to charge interest on overdue bills as they wish to.
Banks will also be allowed to lend below their prime lending rates in a few sectors. Mutual Funds - Mutual funds have been allowed to conduct interest rate swap and forward rate agreement operations with banks, financial institutions and primary dealers. The money market mutual funds will come under the purview of the Securities and Exchange Board of India. Banks that set up money market mutual funds have to set up a separate trust. Gilt and income funds of mutual funds can now take advantage of the cheque writing facility.