The RBI's credit policy is significant as it comes amid fears of further deterioration in the global economy and its consequent impact on the country.

The International Monetary Fund (IMF) in its recent review of the Indian economy said that the onus of providing stimulus to the economy would rest with the monetary authority, as the ability of the government to raise public expenditure to boost industry is limited.

RBI Governor D Subbarao in the fourth quarterly review of he monetary policy on March 4 had said, "RBI on its part would continue to maintain ample liquidity in the system."

The central bank, since mid-September, came out with series of steps to inject liquidity into the system and signaling cut in lending rates to boost demand and industrial growth.

As part of the monetary stimulus, the RBI gradually reduced the short-term lending (repo) rate and cash reserve ratio (CRR), the percentage of funds that banks are required to keep with the central bank, from 9 per cent to 5 per cent.

In addition, the RBI also brought down reverse-repo rate, the interest banks earn on funds parked with the central, to 3.5 per cent from 6 per cent.