RBI Cuts CRR to 4%, Boosts Liquidity by ₹1.16 Lakh Crore

Aakhir Tak – In Shorts

• RBI has reduced the CRR from 4.5% to 4% to boost liquidity.
• This move injects ₹1.16 lakh crore into the banking system.
• The MPC kept the repo rate unchanged at 6.5%.
• Experts call it a balanced approach to stabilize the economy.
• India’s GDP growth rate fell to 5.4% in Q2 FY25.

Aakhir Tak – In Depth

RBI Cuts CRR: A Strategic Move

The Reserve Bank of India (RBI) has reduced the Cash Reserve Ratio (CRR) from 4.5% to 4% to improve liquidity in the banking system. Governor Shaktikanta Das described this as part of a balanced approach to stabilize the economy.

Repo Rate Unchanged, Focus on Inflation

The Monetary Policy Committee (MPC) has decided to keep the repo rate steady at 6.5%. Consequently, the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) remain at 6.25% and 6.75%, respectively.

Expert Opinions on CRR Cut

Experts believe this step will ease liquidity constraints and lower banks’ funding costs. Dr. V.K. Vijayakumar from Geojit Financial Services said, “This is an excellent policy move to stabilize markets and support banking stocks.”

Impact of CRR Cut

Reducing the CRR will inject ₹1.16 lakh crore into the banking system, improving liquidity while balancing inflation control. This measure is expected to boost economic activity without altering the repo rate.

Economic Growth and Challenges

India’s GDP growth slowed to 5.4% in Q2 FY25, the lowest in seven quarters. Analysts have suggested that such measures are vital to address economic strain and stimulate growth.

Aakhir Tak – Key Takeaways to Remember

• RBI reduces CRR to 4% to inject ₹1.16 lakh crore liquidity.
• Repo rate remains steady at 6.5%.
• Experts view it as a necessary move to stabilize economic activities.
• India’s GDP growth rate dipped to 5.4% in Q2 FY25.
• This measure balances liquidity needs with inflation control.

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