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RBI To Pump In Rs 48,000 Crore, Eases Liquidity

PTI 16 Dec 2010, 13:13:42 IST
PTI
Mumbai, Dec 16 :  With the declining trend in inflation and amid reports of liquidity crunch, the Reserve Bank today announced pumping in Rs 48,000 crore into the system while keeping the key policy rates unchanged.

In its mid-quarter review of monetary policy, the apex bank kept its short-term lending and borrowing rates to banks unchanged at 6.25 per cent and 5.25 per cent respectively.

It maintained the mandatory cash reverse ratio at 6 per cent of the banks' total deposits.

The RBI policy position is in line with the Prime Minister's Economic Advisory Council's observation that the system was feeling the pinch of liquidity shortage. It also coincides with inflation coming down to below eight per cent from double digits till recently.

Accordingly, the RBI decided to reduce the Statutory Liquidity Ratio (SLR), the portion of deposits that banks park in government securities, by one percentage point to 24 per cent with effect from December 18.

It has also decided to buy government securities from banks to the tune of Rs 48,000 crore in the next one month to inject more funds into the system. PTI