SLR Rate increased to 25% – CRR rate, repo rate, reverse repo rate remain unchanged in RBI policy

SLR Rate increased to 25% – CRR rate, repo rate, reverse repo rate remain unchanged in RBI policy. The Reserve Bank of India today raised the Statutory Liquidity Ratio (or SLR) the deposits that commercial banks are to park in government securities, by one percentage points to 25 per cent, while keeping all other rates intact.
Here are highlights of the RBI Monetory Policy:

• SLR Rate increased to 25%
• CRR rate, repo rate, reverse repo rate remain unchanged
• Retained the economic growth projection to 6 per cent during FY’10
• Pegged inflation at much higher rate of 6.5 per cent by this fiscal (earlier 5 percent)

RBI officials explain that Inflation is basically grounded in food inflation. It is something which the government is definitely very concerned about. There are number of administrative measures which the government has taken and will continue. Inflation is expected to be around 6 per cent by end of March 2010. According to finance ministry the economy is on a comeback track but there is need for more definite and robust signal.
Effeect of change in SLR: SLR is something which does not really affect the ground reality. As of today the banks in any case are already operating at more than 25 per cent.
indianachu : 08