Arun Jaitley Nudges RBI to Cut Rate to Boost Growth

New Delhi: Nudging the Reserve Bank of India (RBI) to cut interest rates to boost growth, Finance Minister Arun Jaitley has said he hopes the apex bank will take decision on interest rates after taking into account various factors.

The RBI had maintained status quo on interest rate in its two credit policies announced after the formation of the new government in May.

"I, on the same evening (June 3 and August 5), already issued a clear statement and I think that's very clear. This an issue that the RBI decides and I am sure they factor in various circumstances," Mr Jaitley told reporters after addressing the Central Board of the Reserve Bank in Delhi on Sunday.

After the RBI's monetary policy review on August 5, Mr Jaitley had said inflation was moderating and that going forward, "the RBI should examine the liquidity situation, inflation and growth in setting policy rates".

On June credit policy, he had said the government was "concerned with restarting" the investment cycle and moving towards higher growth and job creation.

RBI Governor Raghuram Rajan, who was also present at the press meeting, said, "As of now, we think the policy (to contain retail inflation) is on target. We (RBI's policy measures) are contingent on the data coming in."

The policy regime, Mr Jaitley said in his address to the RBI board, was being geared to attain higher growth, lower inflation and sustainable external balance in the backdrop of sub-5 per cent growth in last two fiscal years.

In its monetary policy review on August 5, the RBI lowered banks' minimum bond holding requirements, known as the statutory liquidity ratio (SLR), by half a percentage point to 22 per cent to free up more money for lending, effective August 9. (Read more)