Key Highlights of RBI Credit Policy May 2011

- The repo rate under the liquidity adjustment facility (LAF) has been increased by 50 basis points. Accordingly, it goes up from 6.75 per cent to 7.25 per cent.

- The reverse repo rate under the LAF, determined with a 100 basis point spread below the repo rate, will stand adjusted at 6.25 per cent.

- The Marginal Standing Facility (MSF) rate, determined with a spread of 100 basis points above the repo rate, gets calibrated at 8.25 per cent.

- The Bank Rate remains at 6.0 per cent.

- The cash reserve ratio (CRR) remains unchanged at 6 per cent of NDTL of scheduled banks.

Savings Bank Deposit Interest Rate

The savings bank deposit interest rate on which there has been a lot of media comment over the last week. A week ago, the Reserve Bank put out a discussion paper debating the pros and cons of this proposal. RBI will review the policy of deregulating the savings bank deposit rate based on the feedback that it gets.

Pending a final decision on that, RBI has decided to increase the savings bank deposit interest rate from the present 3.5 per cent to 4.0 per cent with immediate effect.

Source : Equity Bulls

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