RBI cuts repo rate by 25bps in a surprise move today Sensex crosses 30000

In a surprise move, RBI Governor Dr Raghuram Rajan has cut key policy rates by 25 bps with immediate effect today due to improved fiscal condition of Indian economy. Repo rate, the rate at which RBI lends money to banks for the short term, was reduced by 25 bps to 7.50% while the Reverse Repo Rate, the rate at which RBI borrows money from banks, was cut by 25 bps to 6.50%. The RBI had cut interest rate last time in January 2015. The cash reserve ratio for banks has been kept unchanged at 4%. The marginal standing facility (MSF) rate and the bank rate was cut to 8.50% with immediate effect after this rate cut today.

The RBI has kept the statutory liquidity ratio (SLR) of scheduled commercial banks unchanged at 21.5% of their net demand and time liabilities (NDTL). Statutory liquidity ratio (SLR) refers amount that the commercial banks require to maintain with the RBI in the form of gold or government approved securities (G-Secs or bonds) before lending.

Post this surprise announcement, Sensex and Nifty jumped to record high level with Sensex crossing 30,000 mark for the first time in history.