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RBI cuts CRR 50 basis points
October 07, 2008: The Reserve Bank of India has announced a temporary 50-basis-point reduction in the cash reserve ratio (CRR) or the proportion of deposits banks must keep with the central bank, from 9 to 8.5 per cent in a move to ease liquidity.
The cut will be effective from the fortnight starting October 11 and will release around Rs.20,000 crore into the system. This is the first CRR reduction since June 14, 2003, when it was lowered by 25 basis points to 2.50 per cent.
No immediate change is predicted in interest rates for borrowers. However, flow of credit is expected to improve. Deposit rates are also unlikely to fall.
Source: Business Standard