Policy Rates.

Press Information Bureau

Government of India

Ministry of Finance

30-March-2012 17:24 IST

Policy Rates

To contain inflation and anchor inflationary expectations, the Reserve Bank of India (RBI) cumulatively raised the policy rate (the repo rate) 13 times by 375 basis points (bps) between March 2010 and October, 2011. In view of the slowdown in growth, especially investment activity, and expected moderation in inflation. RBI decided to pause repo rate hikes, and the policy rates were kept unchanged (Repo Rate at 8.5 per cent and Reverse Repo Rate at 7.5 per cent) in Mid Quarter Monetary Policy Review (December 16, 2011). Besides, to mitigate tight liquidity conditions, RBI reduced the Cash Reserve Ratio (CRR) of Scheduled Commercial Banks (SCBs) by 50 bps from 6.0 per cent to 5.5 per cent of their net demand and time liabilities (NDTLs) in its Third Quarter Review of Monetary Policy (January 24, 2012). The CRR was further lowered by 75 bps from 5.5 per cent to 4.75 per cent on March 9, 2012.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in the Lok Sabha today.

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