SLR Rate

With the downward trend in inflation and amid reports of a liquidity crisis, the central bank announced Thursday Rs 48,000 crore into the system pumped by the interest rates unchanged policy.

In its monetary policy in the mid-quarter, the apex bank loans and their short-term credit banks kept interest rates unchanged at 6.25 percent and 5.25 percent.

to invest in the maintenance of the share of cash, 6 percent of total sales and deposits.

RBI rate is consistent with the observation of the Presidential Economic Advisory Council that the system is feeling the effects of illiquidity. It also coincides with declining inflation of less than eight percent in the double digits until recently.

Accordingly, the RBI decided that the statutory funding ratio (SLR), reduce the proportion of deposits that banks park in government securities, a percentage point to 24 percent from 18 December.

He also decided to buy bank bonds worth Rs 48.000 crore in the next month to inject more money into the system.

The easing of monetary policy for the first time this year reversed the position of the suction of liquidity RBI.

"A major challenge for RBI in recent times has been the management of liquidity.The cost of the Reserve Bank's liquidity is to contain pressure in line with the monetary policy stance simply anchored inflation expectations and inflation", said the central bank.

In fact, I said the government today in food inflation 9.46 percent to 4 December, up from 8.6 the previous week.

Earlier, the President said PMEAC C Rangarajan, that "the downward trend of inflation might tilt in favor of holding (interest) at current levels.

RBI Governor D. Subbarao in the semi-annual review of credit policy in November spoke out against rising interest rates in the immediate future.

"... Believes Alone on current growth and inflation trends, the Reserve Bank that the likelihood of such actions in the immediate future is relatively low," he said.

Although the pace of economic growth remains strong, the central bank that inflation."remains well above the comfort of the Reserve Bank.

"Moreover, inflationary risks remain on the upside, domestic demand and rising global commodity prices. So there is a need to remain vigilant on inflation before the aggregation of demand pressure."

Policy initiatives, he added, should give the liquidity crunch in the comfort zone and to stabilize interest rates in the inter bank market.