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इंडियन आवाज़     13 Apr 2024 11:02:06      انڈین آواز

RBI cut in policy rate by 0.5%; Keeps CRR unchanged at 4%

(Last Updated On: 29/09/2015)

RBIReserve Bank of India, RBI, has announced cut in policy rate by 0.5 per cent to 4-year low of 6.75 per cent. However, it kept Cash Reserve Ratio,CRR unchanged at 4 per cent. The apex Bank unveiled its fourth bi-monthly monetary policy for the current fiscal today. RBI says inflation is expected to reach 5.8% in January

2016 which will be below the target of 6% in FY16 . GDP growth estimate has been reduced to 7.4% for the Fiscal Year 16, which the RBI expects will pick up towards the latter part of the fiscal.

RBI Governor Dr. Raghuram Rajan has also indicated that there is still room for cuts.

The reduction comes on the back of interest rates being cut thrice earlier this year by 25 basis points each.

Rajan reiterated the need for banks to pass the benefits of the RBI actions to their lending rates . He also said that with this cut, the focus of the monetary policy will now shift to working with the government to remove impediments to pass a bulk of the cumulative 1.25 per cent cuts to borrowers. RBI says inflation is expected to reach 5.8% in January

2016 which will be below the target of 6% in FY16. GDP growth estimate has been reduced to 7.4% for the Fiscal Year 16, which the RBI expects will pick up towards the latter part of the fiscal. Other highlights of the policy are:

· RBI to issue final guidelines on base rate computation by November-end.

· The apex bank will continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions,

· The bank will also Continue with daily variable rate repos and reverse repos to smooth liquidity.

· Consequently, the reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 7.75 per cent.

· FPI investment limit in debt securities to be fixed in rupee term

· FPI investment limit in government bonds to be hiked to 5 percent by 2018

· To cut SLR/HTM ceiling by 25 bps every quarter till March 17

· To increase the limit for resident entities for hedging their foreign exchange exposure in OTC market from 250,000 US Dollar to 1 mn Dollar

· RBI is setting up an IT subsidiary to assist in monitoring the preparedness of banks and identifying systemic vulnerabilities along with aiding RBI in its own cyber initiatives

· SLR securities under HTM to be cut from 22% to 21.50% from fortnight January 9, 2016.

Meanwhile, Former Finance Minister P Chidambaram today welcomed the 0.50 per cent cut in interest rate announced by the Reserve Bank of India (RBI). He said it was overdue and signals a movement towards a lower interest rate regime .

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