Reserve Bank of India (RBI) keeps key rates unchanged, cuts SLR by 50 bps. Second Bi-Monthly Monetary Policy Statement, 2014-15 By RBI Governor Dr. Raghuram G Rajan.
The Reserve Bank of India (RBI) Governor Dr. Raghuram G Rajan on June 3, 2014 in it’s Second Bi-Monthly Monetary Policy Statement kept key rates unchanged. The repo rate was maintained at 8% and reverse repo rate at 7%, the Statutory Liquidity Ratio (SLR) was cut by 50 basis points to 23.50% while the Cash Reserve Ratio (CRR) for banks has been kept unchanged at 4 per cent.
Monetary and Liquidity Measures
On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to:
- keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent;
- keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL);
- reduce the statutory liquidity ratio (SLR) of scheduled commercial banks 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;
- reduce 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;
- introduce 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 reverse repo rate under the LAF will remain unchanged at 7.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per cent.