RBI extends CRR cut to RRBs, cooperative banks

Reserve Bank of India has extended CRR cuts to RRB's to ease pressure on liquidity in share markets.

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The Cash Reserve Ratio (CRR) has been reduced by 50 basis points to 8.5 per cent of the net demand-and-time liabilities from the fortnight beginning October 11, RBI said in two separate notifications.

Currently, CRR requirements for regional rural banks, scheduled state co-operative banks and scheduled primary (urban) co-operative banks is nine per cent.

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Earlier during the week, RBI reduced CRR for scheduled commercial banks to 8.5 per cent with the intention to release Rs 20,000 crore in the financial system facing liquidity problem arising out global turmoil.

The cut in the ratio happened after a gap of five years. RBI last reduced the CRR by 25 basis points in June 2003.
The announcement comes three weeks ahead of a scheduled half-yearly review of the credit policy.

"This measure is ad hoc, temporary in nature and will be reviewed on a continuous basis in the light of the evolving liquidity conditions," it said.