repo, reverse repo rate by 100 bps

RBI today issued an unambiguous signal to banks to cut rates. It cut its repo and reverse repo rate by one percentage point each. With this cut, RBI will give only 5% to banks who keep their excess cash with them. This reduced return should force banks to lend to corporates rather than keep the money with RBI fearing bad loans. Also cutting the repo rate means banks can take money from the RBI at just 6.5%. The RBI Governor said he hopes banks will pass on this reduced cost to borrowers.