RBI in its monetary policy review kept the policy rates unchanged and Statutory Liquidity Ratio(SLR) cut by 1%. Now the SLR is 23% as against 24% earlier. This cut is expected to provide liquidity of around Rs.60,000 crore.
SLR is the percentage of total deposits that lenders need to invest in the government bonds. The reduction is aimed at ensuring free flow of credit growth through enough liquidity in the system.
Cash Reserve Ratio or CRR is the portion of total deposits that banks are required to keep with the central bank also remained unchanged.
Because of the lower than expected rain fall RBI lowered its growth forecast to 6.5% from 7.3% as predicted in the April policy.
At the same time they raised the inflation forecast from 6.5 per cent to 7 per cent.
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