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RBI releases extra money for lending by lowering bank SLR
06
Aug '14
The apex bank of India – Reserve Bank of India (RBI) has on Tuesday lowered the statutory liquidity ratio (SLR) of banks, by half a percentage point to 22.0 percent of deposits. This move is expected to free thousands of crores of rupees for lending in the banking system.

“This will come in to effect from August 9”, a RBI press release said.

As widely expected, RBI kept its key policy repo rate unchanged, but committed to bringing down inflation to 6 percent by January 2016.

RBI Governor Raghuram Rajan however admitted that though the higher liquidity in the banking system may not bring lending rates down in the short term, the lowering of SLR would ensure that banks have money to lend when credit demand picks up.

Raghuram Rajan did not change the cash reserve ratio (CRR) of scheduled banks at 4% of bank deposits and also kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8%.

Raghuram Rajan said the pressure was to meet both inflation targets for 2015 and 2016. He said, “We are close to the time, when our first target has to be met and alongside we also need to also be confident in reaching the 6 percent target."

Fibre2fashion News Desk - India


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