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Business News Sourced Wired

RBI cuts Cash Reserve Ratio by 0.25 per cent, Repo Rate remains unchanged

Mumbai, Sep 17 (ANI): The Reserve Bank of India (RBI) on Monday lowered the Cash Reserve Ratio (CRR) by 25 basis points from 4.75 per cent to 4.50 per cent, while keeping its key rates unchanged at 8 per cent.

The cash reserve ratio (CRR) or the portion of deposits banks need to park with RBI on a fortnightly basis has been cut to 4.5 per cent from 4.75 percent.

The cut is “effective the fortnight beginning September 22. Consequently, around Rs170 billion of primary liquidity will be injected into the banking system.”

The apex bank raised its key rates 13 times since March 2010 to fight inflation before cutting it by a more-than-expected 50 basis points (bps) in April. One basis point is one hundredth of a percentage point.

Inflation, as measured by the wholesale price index, accelerated to 7.55 per cent in August from 6.87 per cent in July, much above the central bank’s comfort zone. Growth, on the other hand, has slowed to 5.5 percent in the April-June quarter, marginally higher than 5.3 per cent in the previous quarter.

The government last week unleashed a wave of reforms, notably raising diesel prices and allowing foreign firms into India’s supermarkets. (ANI)