Banks could further reduce interest rates if RBI cuts CRR
By Joseph Samson
May 29, 2012
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Chairman of the largest lender of the country, State Bank of India, Mr. Pratip Chaudhuri has said that the more the central bank reduces CRR, more will the banks be able to curtail the interest rates. The statement by SBI comes ahead of the RBI's mid quarterly review due on 18th June.

Cash Reserve Ratio (CRR) is the mandatory deposit, which a bank must keep with the Reserve Bank of India.

RBI last reduced the CRR on 9th March by 75 basis points to 4.75 percent. It had previously reduced the CRR by 50 basis points in January as an attempt to ease liquidity problems.

Chaudhuri stated that reduction in CRR will enable it to provide more affordable car and education loans; SME lendings would aslo become less expensive.


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