RBI rates unchanged as rains hit food prices

No relief yet for retail consumers while banks are facing fall in credit growth

GN Bureau | April 7, 2015


#RBI   #reserve bank of india   #repo rate   #CRR   #cash reserve ratio   #lending   #credit   #rains  

The Reserve Bank of India in its first monetary policy statement for the new financial year 2015-16 has not changed both the repo rate and the cash reserve ratio (CRR) due to increased food prices after unseasonable rains in the country.

The repo rate, at which the RBI lends to banks, has been retained at 7.50 percent. The CRR for banks has also been kept unchanged at 4 percent. The CRR is the percentage of total funds that the banks have to keep with the RBI. The RBI uses the CRR to drain out excessive liquidity out of the banking system.

Unseasonal rainfall in parts of the country has pushed up prices of winter crops with the damage to wheat and pulse in the range of 25-30 percent of the crop yields.

The policy is geared more towards systemic changes, RBI Governor Raghuram Rajan said at a press conference on Tuesday.

Rajan has cut the repo rate twice this calendar year, once in January and again in March, both outside of the policy review cycle. RBI had lowered its policy rate by 25 basis points to 7.50 percent on March 4, after a similar cut on January 15, on the back of softening inflation and the government's commitment to continue with the fiscal consolidation programme.

However, most banks have been loath to pass on the cuts to borrowers, largely because of the pressure it would put on already-stressed margins, as well as a rising non-performing assets.

This has led to a fall in credit growth The lack of credit growth has also been pointed to as a key reason why industry has been unwilling to borrow funds domestically, and has instead turned to cheaper overseas funds.

Meanwhile, the consumer price index rose 5.37 percent in February, marking a fifth consecutive month of staying within the RBI's target of 2 to 6 percent.

First Bi-monthly Monetary Policy Statement, 2015-16

The Monetary Policy Report – April 2015: Click here

Comments

 

Other News

Beyond participation: Why Indian women need economic justice

India pronounced its commitment to gender equality, decent work and inclusive participation in economic, political and social spheres for women. While the rhetoric of progress fills the air, the lived reality for millions of women in India paints a starkly different picture. Despite carrying a heavy worklo

NSE ranks 4th globally in IPO fundraising

The National Stock Exchange of India (NSE) has emerged as the fourth largest exchange in the world in terms of IPO fundraising during the first half of calendar year 2025 (H1CY25), according to data from S&P Global Market Intelligence. Between January and June 2025, the NSE raised $5.51

On World Youth Skills Day, let’s ask: What will it take to retain Gen Z?

On World Youth Skills Day, observed every year on July 15, we’re reminded that the future of any economy depends on how well it invests in its youth. In India, where over half the population is under 30, the question of youth skills is not just about employment, it’s about meaning, wellbeing, a

Modi’s Ghana, Namibia visit a transformative chapter in India-Africa ties

Prime minister Narendra Modi last week completed a visit to five countries of Global South: Ghana, Trinidad & Tobago, Argentina, Brazil and Namibia. The objective was to reignite old existing partnerships and to project India’s leadership and influence in the Global South community. 

MoEFCC and CAQM launch ‘The Breath of Change’

To tackle air pollution in Delhi-NCR through public participation and creative engagement, the Ministry of Environment, Forest and Climate Change (MoEFCC) and the Commission for Air Quality Management (CAQM) have jointly launched a strategic communication campaign titled The Breath of Change.

India well on way to becoming a global IP powerhouse

Intellectual Property (IP) has evolved into a critical component of innovation and global competitiveness in India’s economy. As businesses pivot toward intangible assets like data, algorithms and branding, IP protection is no longer a matter of formality—it is a strategic imperative. The last

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now





Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter