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CRR Rate Cut News: The measure is expected to inject an additional Rs 1.16 lakh crore into the banking system
RBI MPC Meeting December 2024: CRR Reduced To 4%
Cash Reserve Ratio: In a major move to boost liquidity in the banking sector, the Reserve Bank of India (RBI) has announced a reduction in the Cash Reserve Ratio (CRR) from 4.5% to 4%. The measure is expected to inject Rs 1.16 lakh crore into the banking system, providing much-needed relief to lenders.
Announcing the RBI MPC decision on December 6, Das said the financial parameters of banks and NBFCs continue to be strong and the financial sector’s health is at its best.
The central bank kept the repo rate unchanged at 6.5%.
The CRR cut, aimed at enhancing credit flow and supporting economic activity, is likely to benefit businesses and individuals by increasing the availability of funds in the financial system.
This is part of the central bank’s broader strategy to ensure adequate liquidity and stabilize interest rates. Further details on the impact of the decision are expected during RBI’s next monetary policy update.
What Is CRR?
The Cash Reserve Ratio is a key monetary policy tool used by the RBI to regulate liquidity in the banking system. It refers to the percentage of a commercial bank’s total deposits that must be maintained as reserves with the RBI in cash form. Banks are not allowed to use this amount for lending or investment purposes.
