As per RBI’s third bi-monthly monetary policy statement for 2014-15 the central bank has not made any change in Repo rate which is currently at 8%. The Reverse Repo rate has also been left unchanged at 7% and the Cash Reserve Ratio (CRR) is also the same at 4%. The only major change is in Statutory Liquidity Ratio (SLR) which has been slashed by 50 basis points (bps) to 22% from previous 22.50%.
With the Budget reiterating commitment to the medium-term fiscal consolidation plan and setting the target of 4.1% of GDP as the fiscal deficit for 2014-15, banks now have the space to extend credit to the productive sectors in response to its financing needs as growth gains momentum.