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Mumbai - India's central bank, the Reserve Bank of India (RBI), slashed its key interest rates on Saturday, bringing down its short-term lending rate or repo rate and the reverse repo rate (the rate at which the central bank absorbs excess cash from the system) by 100 basis points (bps) each, in its effort to "arrest the downturn and revive the growth momentum."
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It is the third rate cut by the RBI in less than two months.
The bank, however, left CRR (cash reserve ratio or the proportion of deposits banks need to keep with the central bank) and Statutory Liquidity Ratio (SLR) unchanged.
The latest move brings down repo rate to 6.5 percent and the reverse repo rate to 5 percent, its lowest in more than three years. The RBI has held the reverse repo rate steady at 6 percent since July 2006.
The last time the central bank moved to ease tight liquidity conditions was in November 1 when it slashed repo rate by 50 basis points to 7.5 percent and CRR by 100 basis points to 5.5 percent.
The RBI has been under tremendous pressure to maintain financial stability and ease the credit crunch that has roiled the domestic financial market for the past few months.
Don't expect the expected from Dibakar Banerjee.
There is no proposal for government-run State Bank of India to take over any oth...
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