RBI Increased the Repo Rate by 25 Basis Points, MSF Rate Brought Down

The Reserve Bank of India (RBI) on 20 September 2013 increased the repo rate or the short term lending rate by 25 basis points to 7.5 per cent from 7.25 per cent with immediate effect. This means that the Repo rate has been increased by 0.25 percent.

The Governor of RBI, Raghuram Rajan while reviewing the monetary policy for the first time as a Governor, however, brought down the marginal standing facility (MSF) rate by 0.75 per cent to 9.5 per cent. The MSF rate is the one at which the other banks can borrow from the Central Bank.

The cash reserve ratio (CRR) remained unchanged at 4 percent. The cash reserve ratio (CRR) is the portion of the deposits which the banks need to maintain in cash with the RBI. The RBI, in the meanwhile, also brought down the minimum daily maintenance of CRR from 99 percent of the requirement to 95 percent with effect from 21 September 2013.

All these changes were a part of the monetary policy review for September 2013. The next monetary policy review of the Reserve Bank of India (RBI) is scheduled for 29 October 2013.