Syndication02 Jan 2009 - 11:47:19 am
RBI cuts CRR by 50 bps; repo, reverse repo by 100 bps
The Reserve Bank of India (RBI) has cut the cash reserve ratio by 50 basis points (bps) and both the repo and reverse repo rates by 100 bps. The repo rate, after the cut, now stands at 4% from 4.5% earlier.In a statement, the RBI said, “The global financial situation continues to be uncertain. Since the official recognition of recession in the US, the UK, the Euro area and Japan, the downside risks to the global economy have increased. On a review of current global and domestic macroeconomic situation, the Reserve Bank decided to take the measures.”
The release added, “The reduction in the CRR will inject additional liquidity of around Rs 20,000 crore to the financial system. It is expected that the reduction in the policy interest rates and the CRR will further enable banks to provide credit for productive purposes at appropriate interest rates. The Reserve Bank on its part would continue to maintain a comfortable liquidity position in the system.”