New Delhi, Saturday, November 01, 2008: The Reserve Bank of India on Saturday unexpectedly cut its repo rate or main short-term lending rate by 50 basis points to 7.5% and banks’ cash reserve requirements by 100 basis points to 5.5%.

It also cut banks’ bond reserve requirements by 1% point to 24% of their deposits with effect from November 8, 2008, the central bank said in a notification posted on its website.

The cut in its repo rate will take effect from November 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 spillover effects of a global financial crisis. (Agency)