ID :
23746
Fri, 10/10/2008 - 19:27
Auther :
Shortlink :
http://m.oananews.org//node/23746
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R.B.I. cuts C.R.R. by additional 1 percent
Mumbai, Oct 10 (PTI) Taking swift action to inject about Rs 60,000 crore into the cash-strapped system, the Reserve Bank of India (R.B.I.) Friday announced additional one percent cut in mandatory requirements for banks to keep cash with the central bank over and above 0.5 percent reduction announced earlier.
With this, a total 1.5 percent cut in Cash Reserve Ratio (C.R.R.) to 7.5 percent will come into effect from Saturday.
"Accordingly, on a review of the evolving liquidity
situation in the context of global and domestic developments
it has been decided to reduce C.R.R. by 150 basis points to
7.5 percent with effect from the fortnight beginning October
11, 2008 instead of 50 basis points reduction announced on
October 6, 2008," R.B.I. said in a statement here.
Both the measures - a one percent and a 0.5 percent cuts
in C.R.R. - came ahead of R.B.I.'s mid-term review of monetary
policy slated for October 24.
"In the context of the abrupt changes in the
international financial environment, it is important to note
that the economic fundamentals of the Indian economy are
strong and resilient and that India's financial system is
sound, well-capitalist and well-regulated," R.B.I. said.
The central bank said money in forex markets in India
have been operating in a relatively orderly manner.
"The current domestic market conditions are essentially a
reflection of the adverse developments and extreme uncertainty
in international financial markets," the statement said.
The R.B.I. also said that it would ensure price stability
along with the growth process.
"The Reserve Bank is monitoring developments closely and
continuously and would respond swiftly and even preemptively
to any adverse external developments impinging on domestic
financial stability, price stability and inflation
expectations and the continuation of the growth momentum of
the Indian economy," it said.
Finance Minister P. Chidambaram had already assured the
nation that liquidity will be injected into the system if the
need arises.
Besides R.B.I.'s measures, certain other steps like
lifting of curbs on Participatory Notes by market regulator
Securities and Exchange Board of India (S.E.B.I.) and
relaxation in overseas borrowing norms by the government have
already been taken to inject money flow into the system.
With this, a total 1.5 percent cut in Cash Reserve Ratio (C.R.R.) to 7.5 percent will come into effect from Saturday.
"Accordingly, on a review of the evolving liquidity
situation in the context of global and domestic developments
it has been decided to reduce C.R.R. by 150 basis points to
7.5 percent with effect from the fortnight beginning October
11, 2008 instead of 50 basis points reduction announced on
October 6, 2008," R.B.I. said in a statement here.
Both the measures - a one percent and a 0.5 percent cuts
in C.R.R. - came ahead of R.B.I.'s mid-term review of monetary
policy slated for October 24.
"In the context of the abrupt changes in the
international financial environment, it is important to note
that the economic fundamentals of the Indian economy are
strong and resilient and that India's financial system is
sound, well-capitalist and well-regulated," R.B.I. said.
The central bank said money in forex markets in India
have been operating in a relatively orderly manner.
"The current domestic market conditions are essentially a
reflection of the adverse developments and extreme uncertainty
in international financial markets," the statement said.
The R.B.I. also said that it would ensure price stability
along with the growth process.
"The Reserve Bank is monitoring developments closely and
continuously and would respond swiftly and even preemptively
to any adverse external developments impinging on domestic
financial stability, price stability and inflation
expectations and the continuation of the growth momentum of
the Indian economy," it said.
Finance Minister P. Chidambaram had already assured the
nation that liquidity will be injected into the system if the
need arises.
Besides R.B.I.'s measures, certain other steps like
lifting of curbs on Participatory Notes by market regulator
Securities and Exchange Board of India (S.E.B.I.) and
relaxation in overseas borrowing norms by the government have
already been taken to inject money flow into the system.
