RBI on Friday announced that CRR (Cash Reserve Ratio) is decreased by 0.75%. RBI lowering the CRR from 5.5% to 4.75%, this will inject Rs. 48,000 crore into the system.
“The overall (liquidity) deficit in the system persists above the comfort level of the Reserve Bank,” said the central bank in the press release. “Accordingly, it has been decided to inject permanent primary liquidity into the system by reducing the CRR so as to ensure smooth flow of credit to productive sectors of the economy.”
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".
