Zee Media Bureau
New Delhi: The RBI Governor Raghuram Rajan on Tuesday said that the SLR cut will enable the banks to lend more money.
In his press conference soon after the Bi-monthly Monetary Policy today, Raghuram Rajan said the RBI's move to cut SLR by 50 basis point will provide more funds in the money market and spur up lending. SLR cut will create room to lend more to productive sectors.
Rajan said that SLR cut comes at a time when the government is on the path of fiscal consolidation. "SLR cut is more about planning rather than immediate effect," Rajan said.
India's fiscal deficit in the first quarter of the 2014-15 touched $49.2 billion, or 56.1 percent of the full-year target.
Rajan has set a target of bringing down consumer price inflation to 8 percent by the end of this fiscal and to 6 percent by the next fiscal.
He said that the central bank is determined to make consumer inflation ease out. He also said that he is not overly worried about the vegetable prices. "Can't be complacent about vegetable prices but seasonality exists," Rajan said.
The government has also assured of taking steps to keep food inflation under control. The CPI for June tumbled to 29-month low of 7.31 percent.
Meanwhile, The RBI on Tuesday kept the key lending rates - CRR, Repo Rate and Reverse Repo Rate- unchanged as expected by the experts and analysts. However, the central bank has cut the SLR rate by 50 basis points to 22 percent in its Monetary Policy.
The next Bi-monthly Monetary Policy is scheduled on September 30.
