The Reserve Bank of India (RBI) on 3 May 2013 reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points, from 7.5 per cent to 7.25 per cent with immediate effect as part of its annual monetary policy statement 2013-14. The reverse repo rate under the LAF also stands adjusted to 6.25 per cent. The RBI took this step to boost flagging economic growth.
The Marginal Standing Facility (MSF) rate and the Bank Rate, both stand adjusted to 8.25 per cent with immediate effect. The cash reserve ratio (CRR) of scheduled banks has however been retained at 4 per cent of their net demand and time liabilities.
In its Monetary Policy Statement the RBI has stated that the balance of risks stemming from the Reserve Bank's assessment of the growth-inflation dynamic yields little space for further monetary easing. Interest rates on home and car loans will ease following RBI’s decision to cut key policy rates. The next mid-quarter review of Monetary Policy for 2013-14 will be announced on17 June 2013.
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