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RBI cuts CRR by 0.75 percentage points
 Shiv Kumar/TNS

Mumbai, March 9
To ease liquidity situation, the Reserve Bank of India (RBI) today slashed the cash reserve ratio by 75 basis points to 4.75 per cent. The move came a week ahead of RBI’s mid-quarter policy review scheduled for Thursday next.

The market was expecting the CRR rates to be slashed by 50 basis points to 4.5 per cent during the review next week.

The RBI had last reduced CRR by 0.5 percentage points on January 24, thereby injecting Rs 32,000 crore into the cash-strapped system. Today’s cut will inject about Rs 480 billion into the banking system. “The overall deficit in the system persists above the comfort level of the Reserve Bank,” the RBI said in a statement.

Easing cash crunch

n Cash Reserve Ratio is the portion of deposits banks are required to keep with the RBI

n The cut will reduce the liquidity deficit by infusing `48,000 crore into the system

n The bank last reduced the ratio by 50 basis points on January 24

n With this, the RBI would be injecting Rs 80,000 crore into the economy in under 40 days

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