Money & Banking

‘CRR cut is a palliative measure’

A. J. Vinayak Mangalore | Updated on October 30, 2012 Published on October 30, 2012

The RBI’s decision to cut the cash reserve ratio by 25 basis points has been termed as a palliative measure by an economist.

Biswa Swarup Misra, Associate Dean of Xavier Institute of Management, Bhubaneswar, told Business Line that it is a palliative measure.

At the present juncture, there is liquidity pressure in the system. This is going to act as a soothing measure. To some of the banks it may help to pass on the availability of higher liquidity in the form of lower rates, he said.

Stating that now the Government has taken some measures, he said it should have been complemented by some bit of rate reduction.

“RBI could have taken a more forward-looking policy measure in giving smaller dose of rate cut, in addition to the CRR cut, which they have done,” he said.

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Published on October 30, 2012
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