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October 22, 2001
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RBI hopes to sustain rates stance for six months

Reserve Bank of India Governor Bimal Jalan said on Monday that his mid-year policy review released earlier aimed to provide adequate liquidity and keep interest rates stable, with a preference for softer rates.

"As of now, we feel the present stance on interest rates can be sustained for the next six months," he told reporters when asked whether he saw any pressure on rates.

Earlier, the central bank's mid-year review of monetary and credit policy for 2001-02 (April-March) cut banks' cash reserve ratio in two stages to 5.50 per cent from 7.5 per cent.

The bank rate, used by commercial banks to price their loans, was lowered to 6.5 per cent from 7 per cent.

The RBI said there was limited scope for banks to lower their lending rates, citing large levels of bad loans with banks, their high operating expenses and the returns on small saving schemes as some of the hurdles.

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