|
|
The Reserve Bank of India has announced a further cut in the cash reserve ratio (CRR) by 1 per cent. Last week also the RBI had announced a 150 basis points reduction in CRR. This week's cut in CRR by 100 basis points will bring down the rate from 7.5 per cent to 6.5 per cent. As per the new move, about Rs 40,000 crore will be infused into the liquidity-starved economy.
Besides the cuts in CRR, the RBI has decided to allow a temporary relaxation in Statutory Liquidity Ratio (SLR) to the extent of 0.5 per cent of banks’ net time and demand liabilities. Under this new flexibility, banks will be able to borrow the Rs 20,000 crore of additional facility. The banks are also allowed to borrow funds from their overseas branches and correspondent banks, up to a limit of 50 per cent.
In a statement issued to media, RBI said that it is trying out every possible step to maintain liquidity in the economy and is keeping a close eye on monetary conditions in the recent period. In fact, the RBI has undertaken series of measures over the past one month to ensure adequate liquidity in country's economy including removal of restrictions on P-notes.
