The Reserve Bank of India (RBI) has announced a phased reduction in the Cash Reserve Ratio (CRR) by 50 basis points, bringing it down to 4 per cent. The adjustment, set to be implemented in two tranches on 14th December and 28th December, 2024, aims to inject approximately Rs 1.16 lakh crore into the banking system. This policy move is expected to ease liquidity constraints, lower banks’ cost of funds and stimulate credit growth.
The policy decision is expected to favor the banking sector, particularly public sector banks, by reducing funding costs and increasing lending capacity. The CRR reduction aligns with the RBI’s dual strategy of supporting economic growth while keeping inflation under control.
Despite the CRR cut, the RBI has maintained the repo rate at 6.5 per cent, ensuring stability for borrowers.
The RBI’s move underscores its commitment to balancing liquidity infusion, inflation management and economic momentum.
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