Key Points
The Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday directed banks to set aside a larger part of incremental deposits under cash reserve ratio (CRR) to tighten liquidity in the near term...
The remark from Das came while he was announcing key decisions of the Monetary Policy Committee (MPC) meeting held from August 8-10...
"It has been decided that with effect from the fortnight beginning August 12, 2023, scheduled banks shall maintain an incremental cash reserve ratio (I-CRR) of 10 per cent on the increase in their net demand and time liabilities (NDTL) between May 19, 2023 and July 28, 2023," said Das...
However, he clarified that the measure is temporary and has been taken for a brief period in order to absorb liquidity generated by a return of high denomination notes, a move that was announced by the RBI in mid-May...
Hiking the CRR would have had monetary policy connotations, so the temporary increase is aimed to be a non-disruptive way of dealing with the issue of excess liquidity in the system in the backdrop of the recent demonetisation of the INR2000 notes...
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India central bank asks banks to set aside incremental CRR
10, Aug, 23The Reserve Bank of India (RBI) on Thursday asked banks to set aside a larger part of incremental deposits under cash reserve ratio (CRR) to tighten liquidity in the near term.