MW: India RBI eases bank liquidity, stays pat on rates
By V. Phani Kumar
HONG KONG (MarketWatch) -- The Reserve Bank of India on Thursday cut the proportion of deposits that commercial banks are required to park in government bonds and other approved securities by one percentage point to 24% to ease a liquidity crunch in the banking system. The move, along with the RBI's open market auctions for purchase of government securities will release about 480 billion rupees ($10.6 billion) into the banking system, the central bank said in its mid-quarter monetary policy review. The central bank left its lending or repurchase rate at 6.25% after raising the rate six times so far this year. The RBI also left its borrowing, or reverse repurchase rate, at 5.25% in addition to keeping banks' cash reserve ratio at 6%, as expected.
