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Our Bureau

Mumbai , March 28

THE Reserve Bank of India will unveil its annual policy statement for 2005-06 on April 28.

Bankers expect the policy to be benign on the interest rate front but said that some new products for risk management may be permitted.

"We feel that the overnight rates may be left untouched for now and revisited during the busy season policy in October. There could be the introduction of certain new products like credit derivatives and commodity futures as risk management tools since most of the financial markets are volatile at the moment," said a senior official with a public sector bank.

Last year the central bank had set up a working group with members from the RBI, Indian Banks' Association , Forward Markets Commission and banks to study the feasibility of commodity futures.

It was felt that farmers were vulnerable to price risk and the emerging commodity futures exchanges in the country could minimise such risk.

The working group was to examine the role of banks in providing loans against warehouse receipts and evolve a framework for the participation of banks in the commodity futures market.

Bankers are also hopeful of a reduction in the cash reserve ratio to be maintained by them with the central bank. Last year, the RBI had hiked the CRR by 0.5 per cent to 5 per cent as a measure to check the excess liquidity in the system.

"We expect that in keeping with the recommendations in the Budget, there might be some flexibilities introduced in the CRR and statutory liquidity ratio requirements," said a banker.

The Union Budget 2005-06 had suggested the removal of the lower and upper ceilings to the SLR and to remove the limits of CRR to facilitate more flexible conduct of monetary policy.

Bond dealers expect the central bank to come out with measures that will come as a `healing touch' in the wake of hardening bond yields.

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