Indian Lending Rate the Lowest in a Decade

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Jul. 28 – As expected, the Reserve Bank of India yesterday kept its base lending rate at 4.75 percent, the lowest in a decade.

A spokesman for the bank stated: “It is worth reiterating that the Reserve Bank will maintain an accommodative monetary stance until there are definite and robust signs of recovery.” The news of an extended bank policy was welcomed by the business community.

According to The Times of India, the banks lending policy would remain unchanged and focus on the following areas:

a) Bank rate retained at 6 percent

b) Repo rate unchanged at 4.75 percent

c) Reverse repo rate unchanged at 3.25 percent

d) Cash reserve ratio unchanged at 5 percent

e) Statutory liquidity ratio unchanged at 24 percent

f) Inflation forecast hiked to 5 percent from 4 percent

g) Negative inflation only a statistical phenomenon

h) Balance between liquidity and inflation main concern

i) India’s growth now forecast at 6 percent with upward bias

j) More scope for cutting rates by commercial banks

k) Money supply may grow 18 percent this fiscal

l) Policy will ensure enough commercial credit