INSTANT VIEW - RBI cuts repo rate, bank reserve ratio

MUMBAI (Reuters) - The Reserve Bank of India (RBI) on Saturday unexpectedly cut its repo rate or main short-term lending rate by 50 basis points to 7.5 percent and banks' cash reserve requirements by 100 basis points to 5.5 percent.

It also cut banks' bond reserve requirements by 1 percentage point to 24 percent of their deposits with effect from Nov 8, 2008, the central bank said in a notification posted on its website www.rbi.org.in.

****************************************************************** KEY POINTS:

-Repo rate cut by 50 basis points to 7.5 percent with effect from Nov 3.

- Cash reserve ratio cut by 100 basis points 5.5 percent in two stages

-Cash Reserve ratio cut to release 400 billion rupees into the banking system.

- Banks statutory liquidity ratio cut by 1 percentage point to 24 percent from Nov 8.

COMMENTARY:

VIKAS AGARWAL, STRATEGIST AT JP MORGAN, MUMBAI: