RBI Credit / Monetary Policy Review 19 March 2013 Highlights

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The Reserve Bank of India cut its Benchmark Policy Rate by 25 basis points Today (19th March 2013 - Tuesday), for the second time since the start of the year (earlier on January 29th it has cut the Repo Rate and CRR by 25 basis points. Read that post here). The Reserve Bank of India lowered its repo rate to 7.50 percent and left the cash reserve ratio for banks unchanged, in line with expectations.

Here are the Highlights of  RBI Monetary Policy Review of March 19 2013:

• The Reserve Bank cuts the Repo Rate by 25 basis points to 7.5% (earlier it was 7.75%)
• Reverse Repo Rate is now 6.50 (earlier it was 6.75)
• Bank Rate is now 8.50 (earlier it was 8.75)
• It keeps CRR unchanged at 4%.
• SLR is now 23%
• MSF is now 8.50 (Earlier it was 8.75)
• Limited headroom for further monetary easing
• Risk on CAD, inflation remain significant
• Govt. has to remain committed to increase growth, fiscal consolidation
• RBI to ensure adequate credit flow to productive areas
• High retail inflation remains point of concern
• High food inflation worsening
• Deceleration of service sector is a concern
• Headline inflation expected to remain at current levels in FY14.
• Demand supply gap to keep pressure on inflation
• Competitive rate necessary but not enough to revive investment.
• Government has a critical role to play in pushing growth.
• RBI will continue to manage liquidity through OMOs