RBI kept the benchmark repurchase rate at 7.75 percent, but cut the
statutory liquidity ratio (SLR) - the amount of funds that lenders must
set aside - by 50 basis points to 21.5 percent of deposits from February
7, a move that will help banks to increase lending.
Rajan also hoped that more banks will pass on the rate cut announced last month to the borrowers. Only a few banks had lowered their rates after the cut.
Rajan also hoped that more banks will pass on the rate cut announced last month to the borrowers. Only a few banks had lowered their rates after the cut.
Announcing the sixth bi-monthly monetary policy review, Rajan said,
"Given 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 of India to await them and maintain
the current interest rate stance."
Stock markets fell sharply soon after the policy was announced, with banking stocks hit the worst.
RBI announced a slew of initiatives to develop markets, including allowing foreign institutional investors to re-invest government bond coupons even when their investment limits are exhausted.
RBI announced a slew of initiatives to develop markets, including allowing foreign institutional investors to re-invest government bond coupons even when their investment limits are exhausted.
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