CRR cut by 25 bps, to inject Rs.180 billion liquidity to the banking system

RBI has released its third quarter review of monetary policy. RBI has decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8.0 per cent to 7.75 per cent with immediate effect.

The reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands adjusted to 6.75 per cent with immediate effect.

The Marginal Standing Facility (MSF) rate, determined with a spread of 100 basis points above the repo rate, stands adjusted to 8.75 per cent with immediate effect.

The Bank Rate stands adjusted to 8.75 per cent with immediate effect.

RBI has also decided to reduce the cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.25 per cent to 4.0 per cent of their net demand and time liabilities (NDTL) effective the fortnight beginning February 9, 2013.

As a result of this reduction in the CRR, around Rs.180 billion of primary liquidity will be injected into the banking system.

Source : Equity Bulls

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