Nevertheless, the Reserve Bank withdrew the unconventional liquidity support measures and restored the statutory liquidity ratio (SLR) of banks to its pre-crisis level. At the same time, monetary policy had to recognise that the economic growth was recovering from the crisis time slowdown and any aggressive monetary tightening at that point would have affected the recovery.
Subsequently, in January 2010, the CRR was raised by 75 basis points of banks’ net demand and time liabilities (NDTL), and policy rate was increased for the first time in March 2010 by 25 basis points. Between March 2010 and October 2011 the policy repo rate was raised by 375 basis points to contain inflation and anchor inflationary expectations.