The Reserve Bank of India has declared that it will not change key rates in its bi-monthly monetary policy review on Wednesday. The repo rate will remain unchanged at 6 per cent while the reverse repo rate will remain at 5.75 per cent. RBI revised the growth projection down from 7.3 per cent to 6.7 per cent.
People were keen to know whether the central bank cuts key lending rates on Wednesday. While industry bodies had demanded a cut in rates, the biggest lender State Bank of India had speculated the status quo to continue. Notably, the GDP growth rate had hit a three-year down during the June quarter at 5.7 per cent after a five-quarter slide.
Thus, the government and industry bodies were looking to the RBI for some respite to drive growth and investment. The RBI altered standard liquidity ratio (SLR) by 50 basis points to 19.5 per cent from 20 per cent. SLR describes the ratio of reserve required by banks before giving creditor to creditors. The reserve has to be maintained in the form of gold and approved securities etc.
RBI governor Urjit Patel said, inflation is likely to increase from its current level and range between 4.2-4.6 per cent in the second half of 2017. Repo rate is the rate at which the RBI lends money to commercial banks when they need finances.