• Policy repo rate kept unchanged at 8% under the liquidity adjustment facility (LAF)
• Cash reserve ratio (CRR) of scheduled banks kept unchanged at 4% of net demand and time liabilities (NDTL)
• Statutory liquidity ratio (SLR) of scheduled commercial banks reduced by 50 basis points from 23% to 22.5% of their NDTL with effect from the fortnight beginning June 14, 2014
• Liquidity provided under the export credit refinance (ECR) facility reduced from 50% of eligible export credit outstanding to 32%
• Special term repo facility of 0.25% of NDTL introduced to compensate fully for the reduction in access to liquidity under the ECR with immediate effect.
Continued to provide liquidity under 7-day and 14-day term repos of up to 0.75% of NDTL of the banking system The policy stated that if disinflation is faster than anticipated, it would provide RBI with the room to ease its stance on monetary policy. This bolstered market sentiments and led to generation of bullish momentum. RBI’s soft tone in policy coupled with strong interest from foreign funds led to sharp gains in the G-Sec market.
However, the momentum could not be sustained because of a sharp surge in crude oil prices and a weakening currency.
Tensions in the Middle East region, particularly Iraq, led to concerns, which pushed crude oil to its highest level in around nine months.
In the primary space, REC raised funds through 5 Yr bonds with the cutoff at 9.02%.
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