RBI CRR

RBI cuts Indian banks' reserve ratios

The Reserve Bank of India surprises markets with a 75bp reduction in the cash reserve ratio ahead of a key policy meeting this week.
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RBI's cash reserve ratio is at its lowest level since 2004 (AFP)
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<div style="text-align: left;"> RBI's cash reserve ratio is at its lowest level since 2004 (AFP) </div>

In a surprising move, the Reserve Bank of India RBI reduced its cash reserve ratio CRR by 75bp after market hours on Friday, cutting it to 4.75% from 5.5%, effective today.

Consensus expectations were for a 50bp reduction ahead of the key March 15 policy meeting, and total cuts of 100bp for the whole of this year.

It was the first time the RBI had cut the CRR the level of deposits banks have to set aside outside of a policy meeting since July 2010. It last cut the ratio by 50bp on January 24, and it is now at the lowest level since 2004.

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