CRR Rate Cut by RBI
India’s central bank, The Reserve Bank of India has announced a reduction in the Cash Reserve Ratio (CRR) by 75 basis points on Mar 09, 2012 to boost the slowing economic growth in the country by improving liquidity.
The 75 bps cut would increase the liquidity by Rs 48,000 in the country’s economy. The additional funds in the economy would help the economy in the coming months as the liquidity position is expected to become tighter in mid-March due to advance tax outflows.
The RBI governor D Subbaraohas already indicated that the central bank is considering a reversal of the monetary policy as the inflation is fallingand the high interest rates have affected economic growth in the country. The fall in inflation is due to a good kharif harvest as well as a high base. The fall comes as a relief to the government and the central bank.