RBI cuts repo rate by 25bps today to boost growth

RBI Governor Dr Raghuram Rajan has cut key policy rates by 25 bps with immediate effect today as a part of its second bi-monthly policy announcement as expected by economists. Repo rate, the rate at which RBI lends money to banks for the short term, was reduced by 25 bps to 7.25% while the Reverse Repo Rate, the rate at which RBI borrows money from banks, was cut by 25 bps to 6.25%. The cash reserve ratio for banks has been kept unchanged at 4%.

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. The reverse repo rate under the LAF stands adjusted to 6.25%, and the marginal standing facility (MSF) rate and the bank rate stood at 8.25%.