Financial Daily from THE HINDU group of publications
Friday, Dec 27, 2002

Port Info

Group Sites

Home Page - RBI & Other Central Banks
Money & Banking - CRR & Bank Rates

RBI lowers daily CRR level for banks to 70 pc

Our Bureau

MUMBAI, Dec. 26

THE Reserve Bank of India today reduced the level of Cash Reserve Ratio (CRR) that banks are required to maintain on a daily basis from 80 per cent to 70 per cent.

The RBI had, in the mid-term review of its monetary and credit policy in October, raised the daily minimum CRR level to 80 per cent saying that banks were actually maintaining CRR balances at levels much higher than that was required. At the time of the review, banks were required to keep the CRR level at a minimum of 50 per cent in the first week and at 65 per cent in the second week.

It had then said that while moving towards a low CRR, it "is necessary that the demand for bank reserves in the inter-bank market is modulated and the volatility in CRR maintenance is minimised."

Today's move by the central bank could be aimed at regulating the demand in the inter-bank call money market. Liquidity in the inter-bank market had become marginally tight in the past week because of lending restrictions and the call rate briefly crossed the six per cent mark. The call rate, which has been at levels close to the RBI repo rate of 5.5 per cent, has shown signs of firming up this week too.

Send this article to Friends by E-Mail
Comment on this article to

Stories in this Section
CDMA may not lure customers

Reliance lifts Sensex to seven-month high
G-secs on stock retail mode
RBI lowers daily CRR level for banks to 70 pc
Reliance hikes BSES stake to 44%

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line