1) In a move that will encourage banks tolend more for housing and possibly make high - value home loans cheaper, the Reserve Bank of India (RBI) on Wednesday reduced the capital requirement for home loans.
2) The repo rate is the rate at which it lends to banks, while the reverse repo is the facility through which it borrows from banks.
3) It also retained the cash reserve requirement (CRR) at 4%.
4) The RBI has also improved the lendable resources of banks by Rs 50,000 crore by reducing the proportion of deposits that banks have to invest in government bonds.
5) In its monetary policy review, the RBI retained the repo rate at 6.25% and the reverse repo rate at 6%.
6) Significantly, however, the RBI cut its projection for consumer inflation to 2 - 3.5% in the April to September period, down from 4.5%, and to 3.5 - 4.5% in October to March, down from 5%.