RBI Monetary Policy was disclosed today at 11 AM. It’s a bi-monthly policy and has direct impact on Indian Economy, Growth and Inflation.
The key points are here under:
- RBI keeps repo rate unchanged to 8%
- keeps Reverse Repo unchanged to 7%
- keeps CRR unchanged to 4%
- cuts SLR by 50 bps to 22%
- cuts HTM ceiling to 24%
The RBI Monetary policy has a neutral impact as banks are already having SLR of 27%. Hence a half a percentage cut in SLR may seem negligible. Currently, banks are permitted to exceed the limit of 25 per cent of total investments under the held to maturity (HTM) category provided the excess comprises only SLR securities, and bank’s total holdings of SLR securities in the HTM category is not more than 24.5 per cent of their NDTL as on the last Friday of the second preceding fortnight. In order to enable banks greater participation in financial markets, this ceiling is being brought down to 24 per cent of NDTL with effect from the fortnight beginning August 9, 2014. This may give room to the banks to reduce their holdings as per the market condition going forward.