RBI reduces Key Policy rates by 25 basis points

In the second bi-monthly monitory policy statement for 2015-16 (02.06.2015), RBI said that on the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to reduce Key policy rates by 25 basis points.

• reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.5 per cent to 7.25 per cent with immediate effect;
• keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL);
• continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions; and
• Continue with overnight/term variable rate repos and reverse repos to smooth liquidity.

Consequently, the reverse repo rate under the LAF stands adjusted to 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 8.25 per cent.

The key rates with effect from 02.06.2015 is as under

CRR………………………………………          4.00%
SLR……………………………………….        21.50%
Repo Rate…………………………….            7.25%
Reverse Repo Rate……………….            6.25%
Marginal Standing Facility Rate………8.25%
Bank Rate…………………………………..   8.25%

Call Rates……………………………………6.40 to8.40%

RBI continues to provide liquidity under overnight repos of 0.25 percent of bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day term repos of up to 0.75 percent of bank-wise NDTL of the banking system through auctions and continue with daily variable rate term repo and reverse repo auctions to smooth liquidity.