RBI cuts CRR by 25bps

RBI cuts CRR by 25bps

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The Reserve Bank of India on September 17, 2012 announced that the Cash Reserve Ratio will be cut by 25 basis points. The cut in the CRR will be effective from September 22, 2012 and even the reverse repo rates remains at 7 percent.

The reverse repo rate is the rate which central bank absorbs excess liquidity through borrowings from bank. After the cut in the CRR it is expected that the banks would bring down the lending rates, a move which will improve the investments and drive growth in the country. According to the domestic banking industry, the CRR cut is a very positive move from the RBI.