Further reduction possible in CRR
By Joseph Samson
Feb 1, 2012
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There have been indications from the Reserve Bank of India that there may be further decline in the Cash Reserve Ratio in the next monetary policy review. The next policy review is scheduled for 15th March.

In the recent monetary policy review, the apex bank reduced CRR by 50 basis points. However, the policy rates were kept constant. The fall in the CRR is in view of the liquidity situation persisting in the markets. The reduction will help to assuage it.

The Deputy Governor of RBI, Mr. Subir Gokarn said, "We are watching the liquidity situation... I think that decision (another CRR cut) will be taken when we do our mid-quarter review... Having done one, I think the possibility of another is always on the table."

He also said, "When we did CRR cut, we did it recognising that it would be seen as a signal on the monetary stance as well and the signal essentially is that the interest rate cycle has peaked."


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