RBI keeps policy rates unchanged – SLR slashed by 0.5 pc from 23 pc

The Reserve Bank of India maintained status quo with regard to the key interest rate in its monetary policy review in view of the need to curb inflation, which has remained stubbornly high.

RBI decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent.

Reserve Bank of India (RBI) Governor Dr. Raghuram Rajan announced second bi-monthly monetary policy in Mumbai. The reverse repo rate under the LAF will also remain unchanged at 7.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per cent.

The central bank has kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL).

Statutory liquidity ratio (SLR) of scheduled commercial banks has been reduced by 50 basis points from 23.0 per cent to 22.5 per cent of their NDTL with effect from the fortnight beginning June 14, 2014.

RBI has also reduced the liquidity provided under the export credit refinance (ECR) facility from 50 per cent of eligible export credit outstanding to 32 per cent with immediate effect.

It has introduced a special term repo facility of 0.25 per cent of NDTL to compensate fully for the reduction in access to liquidity under the ECR with immediate effect and continue to provide liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system. Consequently,

The third bi-monthly monetary policy statement is scheduled on August 5TH.

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