RBI cuts repo rate by 25 basis points to 6.5%
The Reserve Bank of India (RBI) has cut down repo rate by 25 basis points to 6.5 per cent from 6.75 per cent, with immediate effect.
It was announced in the first bi-monthly monetary policy review of the RBI for the 2016-17 fiscal.
First bi-monthly monetary policy for the 2016-17 says
- Repo rate: RBI has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.75 per cent to 6.5 per cent. It is the rate at which RBI lends to the financial system.
- Cash reserve ratio (CRR): RBI has unchanged CRR and kept it at 4.0 per cent of net demand and time liabilities (NDTL).
- Reverse repo rate: RBI has adjusted (hiked) reverse repo rate under the LAF to 6 per cent. It is the rate at which banks can keep excess funds with the RBI.
- The RBI also introduced number of measures to smoothen liquidity supply so that banks can lend to the productive sectors.