Mumbai, Dec 6 || The Reserve Bank of India (RBI) on Friday slashed the cash reserve ratio (CRR) for banks by 0.5 per cent to make more funds available for lending to spur economic growth, but kept the key policy repo rate unchanged at 6.5 per cent with an eye on inflation.
The CRR has been reduced from 4.5 per cent to 4 per cent. This is the first time since March 2020 that the CRR has been cut. The CRR is the proportion of deposits that banks have to set aside as idle cash in the system.
The CRR cut will infuse Rs 1.16 lakh crore into the banking system and bring down market interest rates.
The monetary policy decision maintains a delicate balance between controlling inflation and pushing up the growth rate in a slowing economy,
RBI Governor Shaktikanta Das said that the decision had been taken by the monetary policy committee with a 4:2 majority after a detailed assessment of the macroeconomic outlook.