RBI keep rates unchanged.

For the second time running since April, the central bank decided to keep rates unchanged. Under current circumstances, the Reserve Bank of India (RBI) believes that easing policy rates would only aggravate inflation and not necessarily stimulate growth. The RBI maintained status quo on the policy front. It kept the cash reserve ratio (CRR) for banks at 4.75% and the repo rate unchanged at 8%. This was in line with the general market expectation. But, there was some liquidity enhancement undertaken by the central bank. The RBI slashed the statutory liquidity ratio (SLR) of scheduled commercial banks from 24% to 23% of their deposits with effect from mid August. The SLR is the percentage of total deposits that banks need to invest in the government bonds. The reduction will help in the flow of credit through the system. A 1% cut, based on the total deposits in the country, will help inject around Rs 620 bn of liquidity into the system.