RBI: What are the Monetary and Liquidity Measures?

India Infoline News Service | Mumbai |

Second Bi-Monthly Monetary Policy Statement, 2014-15 By Dr. Raghuram G Rajan, Governor

Second Bi-Monthly Monetary Policy Statement, 2014-15 By Dr. Raghuram G Rajan, Governor 

On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to:

  • Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent;
  • Keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0% of net demand and time liabilities (NDTL); 
  • Reduce the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 23.0% to 22.5% of their NDTL with effect from the fortnight beginning June 14, 2014; 
  • Reduce the liquidity provided under the export credit refinance (ECR) facility from 50% of eligible export credit outstanding to 32% with immediate effect;
  • Introduce a special term repo facility of 0.25% of NDTL to compensate fully for the reduction in access to liquidity under the ECR with immediate effect; and
  • continue to provide liquidity under 7-day and 14-day term repos of up to 0.75% of NDTL of the banking system.
  • Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0%, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0%.
 

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