3 Feb 2015
Reserve Bank of India Keeps Interest Rate Unchanged
FXStreet (Mumbai) - The Reserve Bank of India (RBI) decided today in its policy meeting to keep the key repo rate under the liquidity adjustment facility (LAF) unchanged at 7.75%, saying that "there have been no substantial new developments on the disinflationary process or on the fiscal outlook since January 15, it is appropriate for the Reserve Bank to await them and maintain the current interest rate stance."
The RBI also said that "key to further easing are data that confirm continuing disinflationary pressures. Also critical would be sustained high quality fiscal consolidation".
SLR reduced
The central bank kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0% of net demand and time liabilities (NDTL), however it reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.0% to 21.5% beginning February 7, 2015.
"In order to create space for banks to expand credit, the SLR is being reduced from 22.0% to 21.5%. Banks should use this headroom to increase their lending to productive sectors on competitive terms so as to support investment and growth," the bank said about the decision to reduce the SLR rate.
The RBI also said that "key to further easing are data that confirm continuing disinflationary pressures. Also critical would be sustained high quality fiscal consolidation".
SLR reduced
The central bank kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0% of net demand and time liabilities (NDTL), however it reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.0% to 21.5% beginning February 7, 2015.
"In order to create space for banks to expand credit, the SLR is being reduced from 22.0% to 21.5%. Banks should use this headroom to increase their lending to productive sectors on competitive terms so as to support investment and growth," the bank said about the decision to reduce the SLR rate.