RBI delivers on expected lines, reduces CRR by 25bp - Angel Broking

The Reserve Bank of India (RBI) in its Second Quarter Monetary Policy Review for FY2013 reduced the Cash Reserve Ratio (CRR) by 25bp, from 4.50% to 4.25%, in line with market expectations.

The RBI maintained its key policy rate - the repo rate unchanged at 8.0%.

Consequently, the reverse repo rate remains at 7.0% and the marginal standing facility (MSF) rate and bank rate remain unchanged at 9.0%. The statutory liquidity ratio (SLR) stands at 23.0% of banks' net demand and time liabilities (NDTL).

RBI has raised the provisioning requirement for standard restructured advances to 2.75% from 2% earlier.

Through its policy stance, the RBI has reiterated that managing inflation and inflationary expectations remain amongst its top priority. The policy statement also raises concerns over growth and indicates that a material improvement in the current account and fiscal deficit situation will increase headroom for the central bank to ease its policy stance.

We maintain our view that in the growth-inflation dynamics, the scale is still tilted in favor of inflation control rather than growth, at least until the next policy review. Post December 2012, we expect the RBI to ease rates by 25bp - 50bp.

Source : Equity Bulls

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