To maintain the balanced and sustainable economic growth, RBI also cut Repo Rate by additional 50 bps to 7.5%. This will helps the commercial banks to cut Prime Lending Rate (PLR) to lend the money to RBI’s focus area. Currently, various sectors of the Indian Economy is facing different hurdles and difficulties for raising money to fund their expansions and projects. 50 bps Cut in Repo Rate will ensure some stability in the economy and of course the Indian Economy also not insulated from the global economic downturn, from my viewpoint, the RBI’s recent move is commendable and going forward it will definitely work.
VMW Definitions: Repo rate is a rate at which, RBI repurchases or sold Govt Securities from the commercial banks to expand/decrease the money supply in exchange of cash, while the CRR is a reserve ratio. Banks kept some portion of their deposits with the RBI at a prescribed reserve rate. SLR on the other hand is the statutory liquidity ratio at which banks need to kept short term securities such as Cash, Govt Securities, Precious Metals like Gold and Silver and other short term securities. For more information on these terms and news, send an email at email@example.com