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MONETARY POLICY 2011-12 Repo rate hiked by 50 bps from 6.75% to 7.25%

Reverse Repo rate hiked by 50 bps from 5.75% to

6.25% (dependent variable on the Repo rate 100 bps below the Repo

rate)

CRR kept unchanged at 6%

SLR kept unchanged at 24%

GDP growth projection for FY 2011-12 placed at

around 8% (in the range of 7.4% and 8.5%)

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CONT-

FY 2011-12 March end WPI inflation baseline projection

placed at 6% with an upward bias

M3 growth projected at 16%, deposit growth at 17% and

non-food credit growth at 19% Bank rate kept unchanged at 6%.

MSF introduced at 1% above the Repo rate (8.25%)

LAF corridor width set at 200 bps (with base at reverserepo6.25% & ceiling at MSF 8.25%)

MP 2011-12.docx

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FIRST QUARTERLY REVIEWIncrease / (Decrease)

since March 2010

At present

Repo Rate .5% 8%.

Reverse Repo Rate .5% 7%

Cash Reserve Ratio Unchanged 6%.

Statutory Liquidity

Ratio

Unchanged 24%

Bank Rate Unchanged 6%

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KEY FEATURES GDP growth projection for FY 2011-12 kept unchanged at

around 8%

Inflation projection for March end FY 2011-12 revisedupwards to 7% from 6%

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SECOND QUARTERLY REVIEW

Increase / (Decrease) At present

Repo Rate .25% 8.5%

Reverse Repo Rate .25%. 7.5%

Cash Reserve Ratio Unchanged 6%

Statutory Liquidity

Ratio

Unchanged 24%

Bank Rate Unchanged 6%

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KEY FEATURES

RBI lowered the growth forecast for 2011-12 from 8%

to 7.6% (in line with our expectations)

Inflation forecast is kept at 7% by Mar-12 end.

Money supply and Credit growth maintained at 15.5%

and 18% respectively

Depreciation of the rupee has emerged as another risk

for inflation.

Indian economy continued to face suppressed inflation

as prices are administered in petroleum sector.

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Increase / (Decrease) At presentRepo Rate Unchanged 8.50%

Reverse RepoRate

Unchanged 7.50%

Cash Reserve

Ratio

.50%5.50%

Statutory

Liquidity Ratio

Unchanged24.00%

Bank Rate Unchanged 6.00%

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KEY FEATURES

The drop in November 2011 WPI inflation to 9.11%, mainly due

to softening in food inflation (4.35% for the week ended

December 3, 2011) GDP growth rate has fallen to 6.9% from 7.7%(expected in Q2)

Due to sharp moderation in industrial growth to

-5.1%

The fiscal deficit at 74.4% of budgeted 2011-12 was

significantly higher than 42.6% in 2010-11

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CONT-FDs (Fixed Deposits) are offering interest

in the range of 7.25% - 9.40% p.a.

Projection of GDP growth for 2011-12 is

revised downwards from 7.6% to 7%.

In reducing the CRR,INR 320 bn ofprimary liquidity will be injected into the

banking system

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INFLATION RATE 2011

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RBI projections in three reviews in 2011-12

Table 1: RBI Projections in Monetary Reviews (in %)

May-11 Jul 11 Oct-11

Growth (2011-12) 8 8 7.6

Inflation (Mar-12) 6 7 7

M3 (Mar-12) 16 15.5 15.5

Deposit (Mar-12) 17 - -

Credit (Mar-12) 19 18 18

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PRESENTATION BY