Here are the key highlights of RBI's bi-monthly monetary policy

The Reserve Bank of India (RBI) kept the key rates unchanged in its fifth bi-monthly policy, announced on Wednesday.

With no change in the rates, the repo rate — the rate at which the central bank lends funds to the commercial banks — stands at 6.50 percent, while the reverse repo rate — the rate at which the central bank borrows money from commercial banks — stands at 6.25 percent.

The MPC, which takes the decisions on the key interest rates, has six members, three of which are members of the RBI, while the rest are appointed by the Government of India.

The board members include RBI governor Urjit Patel, RBI deputy governor Viral Acharya, executive director Michael Debabrata Patra, IIM Ahmedabad professor Ravindra H Dholakia, Delhi School of Economics director Pami Dua and Indian Statistical Institute Professor Chetan Ghate.

The monetary policy committee retained the stance of 'calibrated tightening' to achieve the medium-term 4 percent consumer price index target.

Five out of the six members voted to retain the stance. Ravindra Dholakia, however, had voted to change the stance to neutral.

The central bank has proposed to reduce the Statutory Liquidity Ratio (SLR) by 25 basis points every calendar quarter until it reaches 18 percent of Net Demand and Time Liabilities. One basis point is one-hundredth of one percentage point, i.e. 0.01 percent.

The first reduction of 25 basis points will take effect in the quarter commencing January 2019.

The SLR is being cut in order to align it with the Liquidity Coverage Ratio (LCR) requirement. Currently, SLR stands at 19.5 percent.

Starting April 1, 2019, retail loans will be pegged to external benchmarks.

Inflation has been projected at 2.7-3.2 percent in H2FY19 and 3.8-4.2 percent in H1FY20, with risks tilted to the upside.

GDP growth projection for FY19 has been maintained at 7.4 percent, while it is 7.5 percent for H1FY20 with downside risks.

The decline in crude oil prices is expected to boost India’s growth prospects by improving corporate earnings and raising private consumption through higher disposable incomes, said the RBI statement.