Reserve Bank of India has released its first bi-monthly monetary policy review for the 2016-17 fiscal year.
The RBI has cut key interest rates by 25 basis points.With this change, the Home, auto and other loans are set to become cheaper.
Cash Reserve Ratio: unchanged at 4 percent.Repo rate: The rate at which RBI lends to the financial system has come down to 6.5 percent.
Reverse repo rate: The rate at which banks can keep excess funds with the RBI was hiked to 6 percent.The RBI also introduced number of measures to smoothen liquidity supply so that banks can lend to the productive sectors.
As per the policy, the average overnight borrowings by banks have increased to Rs 1,935 billion in March from Rs 1,345 billion in January.
The inflation objectives to be closer to reality and price-rise will hover around the 5 percent mark during current fiscal.
RBI also retained its GDP growth forecast at 7.6 percent on the assumption of a normal monsoon and a boost to consumption through the implementation of the Seventh Pay Commission recommendations.
But it also expects that the implementation to hurt inflation by 1 to 1.5 per cent over a two year period.