The Reserve Bank of India (RBI) on Friday cut the repo rate from 4.40 per cent to 4 per cent.
Repo rate is the interest rate at which the central bank provides funds to banks to overcome short-term liquidity mismatches.
This rate cut decision was taken in an off-cycle meeting of the monetary policy committee (MPC).
The reverse repo rate (the interest rate at which the central bank absorbs surplus funds from banks) has been cut from 3.75 per cent to 3.35 per cent.