The Reserve Bank of India (RBI) in its April-June quarter monetary
policy on Tuesday left the key policy rates unchanged. However, it has
cut the statuitory liquidity ratio (SLR) to 23% from 24% earlier. This
policy action was by and large in-line with CNBC-TV18 poll. Now, the
repo rate or the rate at which banks borrow from RBI remained at 8%
while the reverse repo rate at which, the banks lend to RBI at 7%.
SLR is the percentage of total deposits that lenders need to invest in
the government bonds. The reduction is aimed at ensuring free flow of
credit growth through enough liquidity in the system.
Cash Reserve Ratio or CRR is the portion of total deposits that banks are required to keep with the central bank also remained unchanged.
Meanwhile, the central bank raised the baseline projection of WPI based inflation to 7% for March, 2013 as against the earlier projection of 6.50%.
"The deficient and uneven monsoon performance so far will have an adverse impact on food inflation. Notwithstanding some moderation, international crude oil prices remain elevated. This, coupled with the pass-through of rupee depreciation to import prices, continues to put upward pressure on domestic fuel price inflation," RBI said in the first quarter review of the credit policy 2012-13.
Interestingly, India is ranked lowest in rating among all BRIC countries. In its macroeconomic policy, RBI alerted the government of the need to revive investment climate. This can be done through policy actions like removal of bottlenecks in infrastructure sector, liberal foreign direct investment norms and so on.
After a gap of nearly three years, RBI had cut policy rates in annual monetary policy announced on April 17 by 50 bps.
SLR is the percentage of total deposits that lenders need to invest in
the government bonds. The reduction is aimed at ensuring free flow of
credit growth through enough liquidity in the system. Cash Reserve Ratio or CRR is the portion of total deposits that banks are required to keep with the central bank also remained unchanged.
Meanwhile, the central bank raised the baseline projection of WPI based inflation to 7% for March, 2013 as against the earlier projection of 6.50%.
"The deficient and uneven monsoon performance so far will have an adverse impact on food inflation. Notwithstanding some moderation, international crude oil prices remain elevated. This, coupled with the pass-through of rupee depreciation to import prices, continues to put upward pressure on domestic fuel price inflation," RBI said in the first quarter review of the credit policy 2012-13.
Interestingly, India is ranked lowest in rating among all BRIC countries. In its macroeconomic policy, RBI alerted the government of the need to revive investment climate. This can be done through policy actions like removal of bottlenecks in infrastructure sector, liberal foreign direct investment norms and so on.
After a gap of nearly three years, RBI had cut policy rates in annual monetary policy announced on April 17 by 50 bps.
