India's central bank, the Reserve Bank of India (RBI) has decided to lower its key lending rates for the first time in nine months following intense pressure from the government and industry.

RBI had maintained its stand on not cutting the interest rates in the country even as it is widely expected by the industry as well as the central government, especially the finance ministry. India's union finance minister P Chidambaram had publically expressed disappointment over the central bank's rigid stance on the matter.

RBI Governor Duvvuri Subbarao has been at the odds of the industry as well as the finance ministry due to his tough stand on not agreeing to cut the interest rates. Even as some say that the independent stand underlines the autonomy of the central bank, several blame the high interest rates for bringing down the economic growth level in the country.

On Tuesday, the RBI lowered its key policy rate by 25 basis points to 7.75 per cent and also reduced its cash reserve ratio by 25 basis points. The reduction in the cash reserve ratio, which is the part of deposits banks must keep with the central bank, to four per cent will infuse about Rs 18,000 core into the banking system of the country.