Mumbai, Dec 16 (IANS) With inflation on the decline, India’s central bank Thursday eased its monetary policy marginally by lowering the amount commercial banks have to retain as cash, gold or government bonds, to release more money for corporate lending.
At the same time, the Reserve Bank of India (RBI) also announced it will buy government securities worth Rs.48,000 crore (over $10 billion), while retaining all the other rates intact in mind-quarter monetary policy review.
The statutory liquidity ratio (SLR) now stands lowered by 100 basis points to 24 percent along with what is called open market operations to buy government securities from banks to ease liquidity in the system.
‘The above two measures are expected to inject liquidity on an enduring basis of the order of Rs.48,000 crore,’ the bank said in a statement.
‘It is Reserve Bank’s endeavour to alleviate liquidity pressure in a manner consistent with the monetary policy stance of containing inflation and anchoring inflationary expectations,’ it added.
The review came against the backdrop of India’s annual inflation rate based on wholesale prices easing to 7.5 percent in November from 8.8 percent in August and factory output registering a 10.8-percent growth in October from just 4.4 percent the previous month
