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RBI Invests Rs. 48,000 Crore For CRR Cut

The Reserve Bank of India on Friday cut the cash reserve ratio by a ‘astonishingly aggressive’ 75 basis points. The move to cut the amount of cash that banks need to park with the RBI (or CRR) from 5.50 per cent to 4.75 per cent of deposits is intended at easing the importunate liquidity crunch being faced by banks.

RBI Logo Reserve Bank of India

Reserve Bank of India

The latest round of CRR cut comes just five days ahead of the mid-quarter review of the Monetary Policy. The RBI action, which came after market hours, will inject around Rs 48,000 crore of primary liquidity into the banking system.

In its third half review of monetary policy in late January, the central bank had condensed the CRR from 6 per cent to 5.50 per cent of deposits. However, this did not ease the liquidity pressure. Thus, the overall deficit in the system persists above the comfort level of the RBI, said a central bank statement.

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