In a bid to ease the current cash crunch in the financial system, the Reserve Bank of India on Monday announced a percentage point reduction in the cash reserve ratio (CRR) to 7.5 per cent from 8.5 per cent.
The revision in CRR, which will come into effect from the fortnight beginning October 11, 2008, will release Rs 60,000 crore into the system, RBI said in a statement.
CRR is the portion of the deposits banks have to keep with the Reserve Bank of India.
The CRR cut will now increase the lendable resources of banks, which had been tightening their loan taps as liquidity came under pressure.
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