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TEA welcomes RBI's decision to reduce repo rate by 25bps
Mar '15
Tirupur Exporters’ Association has welcomed today’s decision of the Reserve Bank of India (RBI) to reduce the Policy Repo Rate by 25 basis points (bps) from 7.75 per cent to 7.50 per cent, and urged banks to pass on the benefit to the customers in near future.
In a press release, TEA president A Sakthivel said the RBI’s announcement has come at a time when the Union Budget 2015-16 has not announced the restoration of 3 per cent Interest Subvention on Rupee Packing Credit given to knitwear garment exporting units.
He said the benefit will certainly workout in favour of exporting units, for whom competitiveness is a key for their survival in the global market.
Subsequent to reduction of Repo Rate by RBI on 15 January, 2015, except for one or two banks, other banks had not reduced their interest rates, Sakthivel said. He appealed to banks to pass on the benefit to the customers in near future, otherwise the announcement by RBI would not be beneficial to customers.
Earlier in the day, in a statement on Monetary Policy, RBI governor Raghuram Rajan said, “Given low capacity utilisation and still-weak indicators of production and credit off-take, it is appropriate for the Reserve Bank to be pre-emptive in its policy action to utilise available space for monetary accommodation.”
Post RBI announcement, the Reverse Repo Rate under the liquidity adjustment facility (LAF) stands adjusted to 6.5 per cent, while the Cash Reserve Ratio of scheduled Banks remains unchanged at 4 per cent of net demand and time liabilities (NDTL).
Going forward, the RBI will seek to bring the inflation rate to 4 per cent by the end of a two year period starting fiscal year 2016-17. (RKS)

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