RBI keeps interest rates on hold, cuts SLR by 50 bps

Reserve Bank of India Governor Raghuram Rajan on Tuesday kept key policy rates unchanged but marginally reduced the money commercial banks have to mandatorily hold in liquid assets, indicating it will await signals from the national budget next month before acting.

While the cash reserve ratio was kept unchanged at 4 per cent, statutory liquidity ratio (SLR), which is the quantum of liquid assets banks have to hold against their deposits, has been reduced by 50 basis points to 22.5 per cent.

In the second bi-monthly monetary policy review for this fiscal, and the first after the Narendra Modi government took charge last month, Reserve Bank of India Governor Raghuram Rajan's stance has status quo given the prevailing domestic and overseas conditions.

The current policy rates are: bank rate 9.0 per cent, repurchase rate 8 per cent, reverse repurchase rate 7 per cent and marginal standing facility rate 9.0 per cent.

The central bank, however, cut the liquidity provided under the export credit refinance facility from 50 per cent of eligible export credit outstanding to 32 per cent. This, in effect, reduces the amount of money available to exporters to get credit.