Reserve Bank keeps key interest rates unchanged

RBI leaves policy rates unchanged in first bi-monthly review

Meanwhile, the RBI reduced the statutory liquidity ratio (SLR) which is the mandatory amount of cash, gold, bonds or other securities that banks must keep with it.

The SLR has been reduced by 50 basis points to 21.5 percent of their net demand and time liabilities (NDTL) effective from the fortnight beginning Feb 7, 2015.

The reduced SLR will help inject additional capital in to the financial system. The Cash Reserve Ratio (CRR) is left unchanged at 4 percent.

The central bank’s action is on expected lines as most analysts had predicted a status quo, considering the apex bank had last month cut the repo rate.

However, the equities markets tumbled after the RBI announced its decision to keep key interest rates unchanged. Heavy selling pressure was observed in the interest sensitive sectors like banking, healthcare and capital goods.

The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 29,217.40 points, was trading at 28,973.25 points (at 12.00 p.m.), down 149.02 points or 0.51 percent from the previous day’s close at 29,122.27 points.

The Sensex has touched a high of 29,253.06 points and a low of 28,901.07 points in the trade so far.

The S&P BSE bankex was down 389.03 points, followed by healthcare index fell 113.73 points and capital goods index was lower by 85.43 points.

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