India’s central bank keeps key lending rates on hold

Mumbai, Feb 2: Ahead of the federal budget for the next fiscal, India’s central bank on Tuesday kept its key lending rates unchanged in line with stake-holders’ expectations. The Reserve Bank of India (RBI) kept the repo and reverse repo rates unchanged during its sixth and the fiscal’s final bi-monthly monetary policy review.

Ignoring the clamour for an easing of monetary policy, as an instrument to boost the fledgling economic growth, India’s central bank maintained its short-term lending rates. The repurchase rate, or the short-term lending rate of the central bank, remains unchanged at 6.75 percent and so does the cash reserve ratio (CRR), or the liquid money banks have to compulsorily hold, at 4.00 percent.

Accordingly, the reverse repo rate, or the central bank’s short-term borrowing rate, remains at 5.75 percent. The Indian equity markets dipped immediately after the RBI came out with its final policy review for the fiscal. The barometer– sensitive index (Sensex) of the Bombay Stock Exchange (BSE) plunged by 55 points.

The S&P BSE Sensex, which opened at 24,868.21 points, was trading at 24,770.26 points (11.10 a.m.) — down 55 points or 0.22 percent from the previous day’s close at 24,824.83 points.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) was trading in the red. It inched down by 20 points, or 0.26 percent, at 7,536.30 points. (IANS)

Cash reserve ratioCentral BankEconomic GrowthIndiaRBIStake-holders