RBI lowers bank rate to 9%

The Reserve Bank on Wednesday issued a notification to reduce the bank rate, or the interest the banks and financial institutions pay to the central bank on borrowed funds, to 9 per cent from 9.5 per cent now.

"The Reserve Bank of India (RBI) has decided to lower the Bank Rate to 9 per cent per annum from 9.5 per cent per annum with effect from April 17, 2012," the RBI said in a statement.

The notification follows the announcement made by RBI Governor D Subbarao in the annual credit policy which was unveiled on Tuesday .

In line with 0.5 per cent cut in short-term lending (repo) rate, the RBI also reduced the bank rate to 9 per cent.

The RBI decided to reduce the benchmark repo rate to 8 per cent from 8.5 per cent, after a gap of three years, to promote growth which during 2011-12, which slipped to a three year low of 6.9 per cent.

The central bank has pegged the GDP growth rate for the current fiscal at 7.3 per cent.