RBI unexpectedly cuts repo rate by 50 bps

1 Nov, 2008, 1325 hrs IST, REUTERS

MUMBAI: India's central bank on Saturday unexpectedly cut its repo rate or main short-term lending rate by 50 basis points to 7.5 per cent and banks’

cash reserve requirements by 100 basis points to 5.5 per cent.
It also cut banks' bond reserve requirements by 1 percentage point to 24 per cent of their deposits with effect from Nov 8, 2008, the central bank said in a notification posted on its website.

The cut in its repo rate will take effect from Nov 3. The cut in banks' cash reserve requirements will take effect in two steps -- one from the fortnight beginning October 25 and the second takes effect from November 8 and will release Rs 40,000 crore into the banking system.

The move follows a 100 basis point cut in its main short-term lending rate last week and is the latest in a slew taken by policymakers to combat the spilloverr effects of a global financial crisis.