Finance Ministry States that by Reducing SLR by 50 Basis Points in its Bi-Monthly Credit Policy Announced Today, RBI has Given Banks Greater Leeway to Lend

The Ministry of Finance states that in RBI’s bi-monthly credit policy announced today, the Reserve Bank of India (RBI) has kept the policy rate unchanged, as expected by markets. RBI has, however, reduced the SLR by 50 basis points giving banks greater leeway to lend, the Ministry adds. The Ministry further observes that as the economy picks-up and demand grows, this will allow an increase in bank credit. Recent data on inflation shows that inflation is moderating. The Finance Ministry states that on its part, the Government remains committed to the path of fiscal consolidation and reviving the investment cycle that will help bring down inflation and pick-up growth further. The Governor, RBI has already stated that RBI will not hold interest rates high any longer than is necessary and if disinflation proceeds as warranted, there will eventually be room to cut rates. The Ministry further states that going forward, the RBI should examine the liquidity situation, inflation and growth in setting policy rates.