Your Friend and Partner

RBI Cuts CRR, SLR & Repo Rate

Posted by hidayathfund on November 10, 2008

In order to infuse liquidity in country’s financial market, the Reserve Bank of India (RBI) has announced on November 1, 2008 to go for reduction in key interest rates. The central bank of India has also decided to cut down minimum cash balance. RBI will infuse additional liquidity worth Rs 400 billion in the market with reduced cost of borrowing. According to media reports, RBI has cut the repo rate by 50 basis points to 7.5 per cent. The Cash Reserve Ratio (CRR) has also been reduced by 100 basis to stand at 5.5 per cent. RBI has also lowered the statutory liquidity ratio (SLR) by 100 basis points to 24 per cent. RBI has also mentioned the dates of the implementation of reductions in key rates. The reduction in repo rate will be implemented from November 3. On the other hand lower cash reserve ratio will come into effect at two stages; the latest will be implemented by November 8.  Cut in SLR will be implemented from November 8. According to RBI, although the global financial crisis has affected India’s financial sector but the presence of regulatory surveillance and effective supervision have been able to minimize the blows. By introducing reduction in CRR, RBI is hopeful of adding additional liquidity worth Rs.400 billion which will stabilize the Indian financial market

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: