RBI Announces Massive Liquidity Infusion, CRR Slashed By 100 Bps In 4 Equal Tranches

A huge 50 basis point cut in Repo Rates was not the only surprise for Indian markets and analysts Friday morning. The Reserve Bank of India (RBI) also announced a massive 100 basis points cut in the Cash Reserve Ratio (CRR) – the money held by banks as a part of their deposits, to 3%. The CRR rate cut will release ₹2.5 lakh crore in the bank system, boosting liquidity and in turn reducing the cost of funding. The cut will take place in 4 tranches beginning September 6 and ending November 29.