Rajan said the central bank has used up all its "space available" to cut interest rates

S&P warned about spending on subsidies and heavy government debt.

RBI governor Raghuram Rajan says a cut in cash reserve ration will not at all impact lending rates.

India allows foreign investors to buy upto $81 bn

He said the total capital requirement for state-run banks is Rs 455 billion ($7.6 billion) in 2014/15 fiscal year, much lower than the Rs 113 billion provided for recapitalisation in the interim budget in February.