Press Esc to close
Tuesday 31 March 2015
News updated at 7:33 AM IST
Weather
Max: 34.6°C
Min : 20.2°C
In Bengaluru
Sunny day

Loans to get cheaper as RBI cuts key policy rates

Mumbai, May 3, 2013, (IANS) :
File Photo

The Reserve Bank of India (RBI) Friday cut key policy rates by 0.25 percent, a move that will make auto, housing and other loans cheaper and help accelerate economic growth.

The repo rate, the rate at which the central bank lends to commercial banks, has been cut by 0.25 percent to 7.25 percent.

The reverse repo rate, the rate that RBI pays to commercial bank on their parked money , has also been lowered by 0.25 percent to 6.25 percent.

The central bank has cut the key policy rates for the third time since January. The repo and reverse repo rates are now at their lowest level since May 2011.

"The policy action undertaken in this review carries forward the measures put in place since January 2012 towards supporting growth in the face of gradual moderation of headline inflation," the RBI said in its annual monetary policy for the financial year 2013-14.

The central bank has the cash reserve ratio unchanged at 4 percent.

"Recent monetary policy action, by itself, cannot revive growth. It needs to be supplemented by efforts towards easing the supply bottlenecks, improving governance and stepping up public investment, alongside continuing commitment to fiscal consolidation," the central bank said.

The RBI said the biggest risk to the Indian economy would stem from the current account deficit (CAD), which last year was "historically the highest and well above the sustainable level of 2.5 per cent of GDP as estimated by the Reserve Bank".

"Admittedly, the fiscal deficit is programmed to decline, but even factoring that in, it is still high. Large fiscal deficits can potentially spill over into the CAD and undermine its sustainability even further. A large CAD, appreciably above the sustainable level year after year, will put pressure on servicing of external liabilities," it said.

On inflation, the central bank said: "Although headline WPI inflation has eased by March 2013 to come close to the Reserve Bank's tolerance threshold, it is important to note that food price pressures persist and supply constraints are endemic, which could lead to a generalisation of inflation and strains on the balance of payments."


Go to Top

Photo Gallery
People being rescued from their homes after flood water entered into their houses...

People being rescued from their homes after flood water entered into their houses...

Sunny Leone and Jay Bhanushali during the promotion of their forthcoming film 'Leela-Ek Paheli'...

Sunny Leone and Jay Bhanushali during the promotion of their forthcoming film 'Leela-Ek Paheli'...

President Pranab Mukherjee presents Padma Shri to Tarak Janubhai Mehta ...

President Pranab Mukherjee presents Padma Shri to Tarak Janubhai Mehta ...

President Pranab Mukherjee presents Padma Shri to Arunima Sinha during Padma Awards 2015 function...

President Pranab Mukherjee presents Padma Shri to Arunima Sinha during Padma Awards 2015 function...

Manohar Parrikar reviews an honor guard upon his arrival at Defense Ministry in Tokyo...

Manohar Parrikar reviews an honor guard upon his arrival at Defense Ministry in Tokyo...

Gray Heron bird seen at Madiwala Lake in Bengaluru...

Gray Heron bird seen at Madiwala Lake in Bengaluru...

Mumbai Indians' players Unmukt Chand and Parthiv Patel with the team's head coach Ricky Ponting...

Mumbai Indians' players Unmukt Chand and Parthiv Patel with the team's head coach Ricky Ponting...

Villagers try to pull the bodies of victims from the rubble after a hillside collapsed ...

Villagers try to pull the bodies of victims from the rubble after a hillside collapsed ...

Villagers watch the rescue operation at the site of a damaged house after a hillside collapsed...

Villagers watch the rescue operation at the site of a damaged house after a hillside collapsed...

A resident looks on as waters rise...

A resident looks on as waters rise...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523