RBI Cuts CRR by 25 bps to Unlock Rs 17,000 Cr in Banking System

The Reserve Bank of India (RBI) left policy repo rate unchanged at 8% but cut CRR (Cash Reserve Ratio) by 25 bps to boost growth and improve the fiscal position. The CRR is the rate at which banks are required to keep its deposits with RBI.

This move by central bank is expected to inject Rs 17,000 crore of liquidity into the banking system. Further, on this decision of CRR cut, banks have indicated that they will respond positively and take a fresh look at the lending rates soon.

According to the Governor of RBI, fighting inflation remains the primary focus of monetary policy.

Banks have also expressed their positive views on RBI’s decision of CRR cut which came down to 4.50% from 4.75% – which is in continuation since March 9th 2012.

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RBI Policy Rates and Reserve Ratio