RBI Governor Raghuram Rajan says there is need to cut SLR further

Reserve Bank of India (RBI) Governor Raghuram Rajan has said obligations put on Indian banks need to be reduced further as they are entering a more competitive environment and the statutory liquidity ratio (SLR) will have to be cut further.

SLR is the amount that the commercial banks require to maintain in the form of gold or government approved securities before providing credit to the customers.

RBI on Tuesday kept its key policy repo rate unchanged as widely expected, but cut SLR for banks by 50 basis points.

In the post-review conference, while warning about inflationary risks should a shortfall in monsoon rains spark a surge in food prices, Rajan also said interest rate tools are blunt and the RBI is trying to use other tools.

(Reuters)