The Reserve Bank of India (RBI) has decided to keep the policy Repo rate under the liquidity adjustment facility (LAF) unchanged at 7.75 per cent.
Also, it has kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL).
However, it has reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.0 per cent to 21.5 per cent of their NDTL with effect from the fortnight beginning February 7, 2015.
The RBI said these decisions were based on the assessment of the current and evolving macro-economic situation.
The apex bank has also replaced the export credit refinance (ECR) facility with the provision of system-level liquidity with effect from February 7, 2015.
It has decided to continue to provide liquidity under overnight repos of 0.25 per cent of bank-wise NDTL at the LAF repo rate, and liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system through auctions.
Consequent to these decision, the reverse Repo rate under the LAF will remain unchanged at 6.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.75 per cent.
Watch video: RBI holds interest rates steady
Following are the highlights of RBI’s bi-monthly monetary policy statement:
Short-term lending rate unchanged at 7.75 per cent.
Cash Reserve Ratio unchanged at 4 per cent.
Statutory Liquidity Ratio cut to 21.5 per cent, effective February 7, to unlock banking funds.
Current Account Deficit at 1.3 per cent of GDP for 2014-15.
Inflation target at 6 per cent by January 2016.
GDP growth estimates under old base for current fiscal at 5.5 per cent; 6.5 per cent for 2015-16.
Banks asked to lend to productive sector to spur investment, growth
Limit of foreign exchange remittance doubled to USD 2,50,000 per person annually
72 application for Small Finance Banks, 41 for Payments Banks received
Export credit refinance to be replaced with provision of system level liquidity, effective February 7
Foreign portfolio investors allowed to re-invest in G-Secs after their investment limits are utilised
Bi-monthly policy statement for 2015-16 on April 7