In the run-up to the elections, Reserve Bank of India (RBI) in its First Bi-monthly Monetary Policy Statement for the year 2014-15, on much expected lines, left the key policy rates unchanged. Thus, policy repo rate under the liquidity adjustment facility (LAF) stood unchanged at 8.0% and consequently, the reverse repo rate under the LAF too was left unchanged at 7.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per cent.
However, to discourage increasing dependence on overnight rates, RBI increased the liquidity provided under 7-day and 14-day term repos from 0.5 per cent of NDTL of the banking system to 0.75 per cent, and decreased the liquidity provided under overnight repos under the LAF from 0.5 per cent of bank-wise NDTL to 0.25 per cent with immediate effect