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RBI cuts repo rate by 50 bps

Posted by malvika15 on Sunday, 2 November, 2008

RBI cuts repo rate by 50 bps

In a major move to inject an additional estimated Rs 85,000 crore into the system, Reserve Bank of India today cut key deposit requirements for banks by 1 per cent and its short-term lending rate by 0.5 per cent, a decision that may help soften general interest rates.

The decisions to cut the Cash Reserve Ratio and Statutory Liquidity Ratio by one per cent each and Repo Rate by 0.50 per cent come a week after the busy season credit policy review by RBI in which it had given an assurance of more measures to boost economic growth.

 

India‘s central bank on Saturday unexpectedly cut its repo rate or main short-term lending rate by 50 basis points to 7.5 per cent and banks’ cash reserve requirements by 100 basis points to 5.5 per cent.

It also cut banks’ bond reserve requirements by 1 percentage point to 24 per cent of their deposits with effect from Nov 8, 2008, the central bank said in a notification posted on its website.

The cut in its repo rate will take effect from Nov 3. The cut in banks’ cash reserve requirements will take effect in two steps — one from the fortnight beginning October 25 and the second takes effect from November 8 and will release Rs 40,000 crore into the banking system.

The move follows a 100 basis point cut in its main short-term lending rate last week and is the latest in a slew taken by policymakers to combat the spillover effects of a global financial crisis.

Source: The Economic Times

 

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One Response to “RBI cuts repo rate by 50 bps”

  1. […] The decisions to cut the Cash Reserve Ratio and Statutory Liquidity Ratio by one per cent each and Repo Rate by 0.50 per cent come a week after the busy season credit policy review by RBI in which it had given an assurance of more … RBI cuts repo rate by 50 bps « NaAtMaD – News and Articles that … […]

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