RBI cuts repo, reverse repo rates by 25 bps

Mumbai, Apr 21 (ANI): The Reserve Bank of India (RBI) revealed the annual monetary policy here on Tuesday.

According to the report, the short-term lending (repo) rate and borrowing (reverse repo) rates have been reduced by 25 basis points.

The repo rate, thus stands at 3.25 per cent while reverse repo rate stands at 4.75 per cent.

The RBI has said that there is scope for banks to cut lending rates and has asked banks to review their benchmark prime lending rates (BPLR).

A committee has now been formed to review the BPLR system.

Since October last year, the RBI has cut its repo rate by 4 percent and the reverse repo by 2.5 percent.

However, the cash reserve ratio (CRR), the percentage of deposits, which the commercial banks have to keep with the apex bank, remained unchanged at 5 percent.

The RBI has projected the economic growth for the fiscal year 2009-2010 at 6 percent and the average inflation at 3 percent for the medium term.

It was further revealed that the credit growth in the current financial year (ending March 2010) could touch 20 percent while deposit growth is estimated at 18 per cent.

Concerned over the current recessionary trends, the RBI warned that the slowdown could lead to an increase in the non-performing loans for banks.

It advised the banks to maintain credit quality. (ANI)