Mumbai: The Reserve Bank on Friday eased money supply further by cutting key policy rates and ratios—decisions that would among other things infuse Rs 20,000 crore into the banking system.
The central bank cut Cash Reserve Ratio, the amount of cash that banks need to keep in reserve, by 0.50 percentage point to five per cent.
It also cut repo and reverse repo, the short-term rates at which RBI lends and borrows from banks, by 100 basis points each to 5.5 per cent and four per cent respectively.
The cuts in repo and reverse repo are with immediate effect, while CRR cut would be effective from the fortnight beginning January 17.
The combination of measures would further enable banks to provide credit at appropriate interest rates, RBI said, adding that it would continue to maintain a comfortable liquidity position in the system.
Noting that credit growth has moderated, RBI said it urges banks to monitor their loan portfolio and take early action, including debt restructuring where warranted. It would prevent the rise of bad assets down the road and safeguard the gains of the last several years in improving asset quality, it said.
Comments
0 comment