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