In line with the Modi Government’s priority for taming inflation, the Reserve Bank of India took a tough stand and announced a status quo on monetary policy except for reducing statutory liquidity ratio (SlR) which was revised downwards by 0.5 percentage points to 22.5 per cent.
This is the second consecutive time that RBI Governor Raghuram Rajan has kept interest rates unchanged, belying hopes of any reduction in EMIs for home and auto loans. The repo rate, at which the RBI lends to banks, has been retained at 8 per cent and the cash reserve ratio has been kept unchanged at 4 per cent.
The SlR, the mandatory amount of bonds lenders must park at the RBI, has been cut by 0.5 basis points to 22.5 per cent of their net demand and time liabilities with effect from June 14. This cut is expected to unlocked about Rs 40,000 crore of banking funds.