After the CRR cut it is the turn of Repo cut that will be used to inject more money into the system. Bankers feel that the Reserve Bank of India will now cut the Repo rate by 25 to 50 basis points to increase the liquidity.

S K Goel, Chairman and Managing Director of UCO Bank said, "There may be 50 basis point cut in repo rate in the mid-term policy review."

The central bank is scheduled to announce its mid-term monetary policy review on the 24th of October.

Repo rate is the interest rate at which the RBI lends to other commercial banks, so that they can meet with their liquidity problems. It is a rate at which a loan is granted when an asset is given as collateral or security for the loan with a promise by the borrower to repossess the asset.

During the first quarterly review of the credit policy announced on July 29th, the repo rate was raised by 50 basis points to 9% from 8.5%.

Punjab National Bank Executive Director J M Garg also expects a cut in the repo rate. He thinks that the RBI would take a decision depending on the circumstances.

RBI's has recently reversed its tight monetary policy that was being followed to control inflation, now to solve the problems arising due to shortfall of funds. It has cut the CRR by 150 basis points to 7.5%. Now that the inflation has tamed below 12% mark, the central bank upcoming credit policy is likely to shift its focus to growth.

HDFC Bank's Chief Economist Abheek Barua feels that a fall in inflation may prompt RBI to cut repo rate by 25 basis points in the mid-term review later this month.

The Prime Minister's Economic Advisory Council (PMEAC) on Monday also said that with easing inflation, focus could now turn to increasing growth momentum, and RBI may consider more reduction in cash reserve ratio (CRR) and statutory liquidity ratio (SLR) to inject liquidity.

"Either of the instruments could be used to infuse liquidity in the system," PMEAC chairman Suresh Tendulkar said.

Commenting on the rate cut expected in and around the policy meet, Arun Kaul, Chief General Manager, Punjab National Bank, said: "The market does expect some sort of cut in SLR to provide liquidity easing measures in market."