RBI Second Bi-monthly Monetary Policy, 2014-15 -Update Repo Rate RBI keeps the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent. Reverse Repo Rate Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per cent. Cash Reserve Ratio RBI keeps the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL). SLR RBI reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 23% to 22.5% of their NDTL with effect from the fortnight beginning June 14, 2014. Key Implications of the Policy • Change in the SLR is likely to provide consolation to some private banks with finely-tuned SLR management. • 50 bps fall in SLR will lead to marginal rise in the overall cost of funds in the system, but near-term impact is expected to be limited given the flush liquidity position in the system. • In this policy, we see that the RBI is tightening its grip on the term structure in the system, even as it keeps the future trajectory of the cost of funds firmly geared to that of consumer inflation
Posted on: Tue, 03 Jun 2014 10:27:43 +0000
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