The Reserve Bank of India has made no change in the key rates but indicated to adopt flexible approach in future if required.
Releasing its third quarter review for the current fiscal, the apex bank has kept all the key rates unchanged in Benchmark Prime Lending Rate (BPLR), Repo rate, Reverse Repo Rate, Cash Reserve Ratio (CRR) and Statuary Liquidity Ratio (SLR). But D Subbarao, the Governor of RBI, has stated that the changes in all key rates could be happened if situation demands.
BPLR is the prime rate on which banks lend debts to its preferred customers; Repo rate is the rate on which banks borrow money from the Central bank; Reverse Repo rate is the rate on which banks deposit their excess money in exchange of the government securities, while CRR is the rate on which banks have to park the slice of cash with the Central bank. SLR is the ratio, which banks have to maintain with RBI in the form of cash, gold or approved securities.
At present, BPLR is 12.75% to 13.25%, repo rate 5.5%, reverse repo rate 4%, CRR 5.0% and SLR at 24%.
The RBI has also revised the Gross Domestic Product (GDP) growth rate from earlier projected rate of 7.5-8 percent to 7.0 percent due to predicting the worsening effect of global meltdown.
Describing the reason of slowdown, RBI said that India is an integral part of a globe and cannot be remained immune from global crisis, its nature and magnitude. ‘In responding to the crisis, India has to share the uncertainty on the way forward just like the rest of the world,’ said RBI in its review.
“The knock-on effects of the global financial crisis, economic slowdown, and falling commodity prices are affecting the Indian economy in several ways,” added RBI.
RBI has also estimated to further cooling the declining inflation to below 3% by the end-March 2009 while the fiscal deficit is re-projected to 5.9% of the GDP as against the previous estimation of 2.5%.
The Money supply growth has been revised to 19% from 17% earlier.
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