The Reserve Bank in a surprise move on announced 0.75 percentage points cut in its key policy ratio to pump Rs 48,000 crore in the economy, but the move may not lead to immediate reduction in lending rates.
Without waiting for the scheduled policy review due next week, RBI reduced the cash reserve ratio (CRR) — the portion of deposits banks require to keep with the central bank — from 5.5 per cent to 4.75 per cent with effect from tomorrow with a view to ease the liquidity situation.
With this move, the Reserve Bank of India (RBI) would be injecting around Rs 80,000 crore into the economy in less than 40 days. The central bank in January had reduced CRR by 0.5 percentage points, releasing Rs 32,000 crore liquidity.
These measures, according to the central bank, are aimed at addressing “the liquidity deficit (which) is expected to increase significantly during the second week of March on account of to advance tax outflows and the usual front-loading of cash balances by banks with the Reserve Bank.”
The last date for advance tax payment in March 15 and is estimated to drain out Rs 60,000 crore from the system.
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