Ordinance to vest more powers with RBI: Cabinet

New Delhi, Jan 11 (UNI) The government today decided to promulgate an ordinance to give more operational flexibility to the Reserve Bank of India to ensure enough liquidity in the market in view of the soaring demand for credit, particularly in the light of the new SEZ policy.

Under the decision, taken at a Cabinet meeting chaired by Prime Minister Manmohan Singh, the proposed ordinance would amend the Banking Regulation Act, 1949.

The present provisions of the 1949 Act were found to be inadequate in the context of reforms taking place in the financial sector, particularly with regard to Special Economic Zones (SEZs), Information and Broadcasting Minister Priya Ranjan Dasmunsi told reporters.

Further, the ordinance would restore the powers of the central government to exempt the applicability of the provisions of the Act in certain cases immediately.

The RBI would be at liberty to fix the floor rate and ceiling of the statutory liquidity ratio (SLR) which at present are at 25 per cent and 40 per cent respectively.

UNI