RBI Governor D. Subbarao will undertake the review with chief executives of commercial banks that comes against the backdrop of a sharp fall in India's economic growth, due mainly to lacklustre performance by industry in the wake of the global meltdown.
"We think the RBI is unlikely to cut the reverse repo rate, which is currently the effective short-term policy rate," said Goldman Sachs in a report, ahead of the policy review.
"However, the RBI may cap the amount that banks can put in the reverse repo window, currently running at historic highs, to encourage more lending."
Giving the reasons, the consultancy said not only was there excess liquidity in the system, but commercial banks were also yet to pass on the real benefits of the previous rate cuts to industry or consumers.
-IANS
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