The Reserve Bank of India (RBI) has decided to reduced the Statutory Liquidity Ratio (SLR) of scheduled commercial banks (SCBs) from 25% to 24% of NDTL (Net Demand and Time Liabilities) with effect from December 18, 2010. The Bond markets are likely to be affected.
The hold on the key rates come after after six increases since March this year. Click here to download the RBI release.
Repo Rate and Reverse Repo retained at 6.25% and 5.25% respectively under the Reserve Bank’s liquidity adjustment facility (LAF).
CRR retained at 6% of net demand and time liabilities (NDTL) of scheduled banks.
The RBI has also decided to conduct open market operation (OMO) auctions for purchase of government securities for an aggregate amount of Rs 48,000 crore in the next one month, the schedule for which is being issued separately, as per the RBI policy released today.
The policy also said given the permanent reduction in the SLR by one per cent of NDTL, the additional liquidity support under the LAF announced by the Reserve Bank on November 29, 2010 will now be available up to the extent of 1.0% (instead of 2.0%) of the NDTL of SCBs from December 18, 2010 to January 28, 2011.
The Reserve Bank of India has been the most aggressive major central bank in Asia this year, lifting key lending and borrowing rates by 150 and 200 basis points, respectively, as surging prices spurred by rising food costs undermine purchasing power in an economy growing at nearly 9%.
