Tuesday, June 10, 2025
HomeEconomyRBI Monetary Policy: CRR cut to free up Rs 1.16 lakh crore

RBI Monetary Policy: CRR cut to free up Rs 1.16 lakh crore

-

[ad_1]

Mumbai: The Reserve Bank of India’s monetary policy committee delivered a cut in the cash reserve ratio (CRR) by 50 basis points to 4%, as the central bank expects liquidity to be tight in the coming months. Market participants are viewing this CRR cut as a signal that the monetary policy process toward a rate cut has started.

This cut, which will be done in two tranches of 25bps each, on December 14 and December 28, will free up excess funds of ₹1.16 lakh crore, which banks would be free to use as per their discretion.

CRR is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank.

CRR Cut to Free Up ₹1.16 Lakh Crore

“The tone of the Monetary Policy Committee was neutral today, but the actions clearly indicate a rate cut coming. This CRR cut definitely means that we are moving towards an accommodative stance and the process of a rate cut has started. By the next MPC, the borrowing of the government plus the budget will be in the public domain, so things will be clearer for the MPC to decide,” said Rajeev Pawar, head of treasury at Ujjivan Small Finance Bank.The central bank governor said core liquidity is expected to be under pressure in the coming months due to tax outflows, increase in currency in circulation and volatility in capital flows.

“Given the challenges around timing and window of conventional rate cuts, along with foreign exchange cost of rate cuts – like liquidity implication costs and imported inflation amidst uncertain global dynamics – a CRR cut of 50 basis points was the least costly measure for the Reserve Bank of India,” said Madhavi Arora, lead economist at Emkay Global Financial Services.

“In the coming weeks, we can see that we are going into a phase where liquidity is going to be very tight in the later part of December and continuing into January and perhaps into February. Therefore, we thought it was time to normalise CRR levels,” said Governor Shaktikanta Das, addressing the media. The CRR was increased in April 2022 as a temporary measure and was maintained at 4.5%.

Nominations for ET MSME Awards are now open. The last day to apply is December 15, 2024. Click here to submit your entry for any one or more of the 22 categories and stand a chance to win a prestigious award.

[ad_2]

Source link

LATEST POSTS

Soft Play Bus Essex with Squeeze Rollers & Dizzy Discs – A Fun-Filled Mobile Adventure

In today’s world of children’s entertainment, finding activities that combine physical play with safety and creativity can be a challenge. The Soft Play Bus Essex offers a...

WitchSpin Casino: Daily ₱777 Bonus Explained

Online casinos attract players by offering exciting games and generous bonuses. One of the most popular features of WitchSpin Casino is its daily ₱777 bonus....

Gaming and Adventure Combined: The Ultimate Guide for Norwegian Tourists

For many Norwegian tourists, traveling is all about exploring new places, immersing themselves in different cultures, and seeking unforgettable adventures. But what if your journey...

Non-Disclosure Agreement for Customer Privacy Protection

In today's digital age, privacy concerns are more significant than ever, especially when it comes to safeguarding the personal and sensitive information of customers. Businesses...

Most Popular

spot_img