AEPC Chairman hails RBI move to reduce CRR

The tight liquidity conditions which were prevailing since long will surely easy out. It will in turn boost our economy and robust the structural deficit in the system by infusing the permanent primary liquidity in the system. With the easing of inflation and reducing CRR by 25 basis points the garment sector hopes to get credit at the lower interest. RBI by this announcement has addressed both the demand and supply constrains.”

Based on an assessment of the current macroeconomic situation, 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.

Consequent to this, the reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, gets calibrated to 6.75 per cent. Similarly, the marginal standing facility (MSF) rate, determined with a spread of 100 basis points above the repo rate, and also the Bank Rate stand adjusted to 8.75 per cent.

These changes have since come into effect immediately after the announcement.

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.

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