When the Reserve Bank of India (RBI) reduces the Statutory Liquidity Ratio (SLR) by 50 basis points, it allows scheduled commercial banks to hold a smaller percentage of their deposits in liquid assets, thereby increasing their available funds for lending. This surplus liquidity can lead banks to reduce their lending rates to attract borrowers, aiming to stimulate economic growth by making loans more affordable. Lower lending rates encourage businesses and consumers to take loans, thereby boosting investment and consumption in the economy, which is consistent with the monetary policy objectives of the RBI.