MTECHTIPS

MTECHTIPS:-Repo Rates under grip; but RBI cuts CRR injecting Rs.175 bn

Reserve Bank of India, defying the pressure from India government to cut rates have decided to keep repo rates intact even as it brought down Cash Reserve Ratio thereby facilitating injection of Rs.175 billion into the banking system of nation.In its Second Quarter Review of Monetary Policy for 2012-13, D. Subbarao, Governor RBI said:“A short while ago, we put out the Second Quarter Review. Based on an assessment of the current macroeconomic situation, we have decided to Cut the cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.5 per cent to 4.25 per cent of their net demand and time liabilities (NDTL) effective the fortnight beginning November 3, 2012.The reduction in the CRR, will inject around '175 billion of primary liquidity into the banking system.There is no change in policy interest rate. Accordingly, the repo rate under the liquidity adjustment facility remains at 8.0 per cent.