Reserve Bank of India cuts CRR by 0.25 per cent to 4.5 per cent

Reserve Bank of India (RBI) today cuts Cash Reserve Ratio (CRR) by 0.25 per cent but keeps repo rate and reverse repo rate unchanged in view of high inflation.

The cut in Cash Reserve Ratio (CRR) will inject about Rs 17,000 crore liquidity into the Indian banking system.

The liquidity infusion, RBI said, would ensure adequate flow of credit to productive sectors of the economy.

Following the cut, CRR will come down to 4.5 per cent while the repo rate, at which the central bank lends to the banks, would remain unchanged at 8 per cent.

The reverse repo, at which it absorbs excess liquidity through borrowings from banks, remains at 7 per cent.

The Governor of Reserve Bank of India (RBI) said, “As inflationary tendencies have persisted, the primary focus of monetary policy remains the containment of inflation and anchoring of inflation expectations”.

The Reserve Bank of India (RBI) said the CRR cut would be effective from September 22, 2012.

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