Commodity Online
NEW DELHI : India’s central bank, the Reserve Bank of India on Friday slashed repo, reserve repo rates and cash reserve ratio (CRR ) by 100 and 50 basis points respectively.

The repo rates will now stands at 5.5 percent and reverse repo rate at 4 percent while the CRR at 5 percent and will infuse Rs 20,000 crore in the system.

The market had widely expected RBI to cut the key lending rates. The cut in repo and reserve repo is with immediate effect while CRR cut will be effective from fortnight beginning January 17. Since August RBI cut CRR by 450 basis.

Repo rate is the rate at which banks borrow from RBI while the reverse repo is the rate which RBI gives banks for parking their surplus funds. These two rates are seen as the floor and the cap for daily call money movement.

The decisions would among other things infuse Rs 20,000 crore into the banking system.

Both reductions are effective immediately. The repo rate has been cut aggressively since mid-October last year as the central bank tried to minimize the knock-on effects of the global financial crisis.