RBI signals tightening of interest rates

The Reserve Bank on Tuesday signalled the withdrawal of the easy monetary policy stance by raising the statutory liquidity ratio, the portion of funds that banks are required to park in government securities, by 100 basis points, said economists.

The Reserve Bank, which had been following soft monetary policy since September last year to inject liquidity into the system to help industry combat the impact of the global meltdown, on Tuesday reversed its stance by increasing the SLR by one per cent to 25 per cent, though it kept other rates unchanged.