Srinagar: The Reserve Bank of India (RBI) has cut the Cash Reserve Ratio (CRR) by 50 basis points to 4%. This move, announced at the Monetary Policy Committee (MPC) meeting on Friday, is set to inject ₹1.16 lakh crore into the banking system, boosting liquidity and supporting economic growth.
Business leaders who spoke to Ziraat Times said that they view the move as a growth-friendly measure.
By freeing up additional funds for banks, the CRR cut is expected to stimulate lending at a crunch time in J&K, which could support businesses, and also economic momentum, they said.
RBI Governor Shaktikanta Das emphasized that the reduction, to be implemented in two tranches of 25 basis points each starting December 14, is aimed at easing liquidity constraints without triggering inflation. “The cut will provide durable liquidity, enabling banks to lend more and support growth,” said Das.
Despite this liquidity boost, the central bank opted to maintain the repo rate at 6.5% for the 11th consecutive meeting, citing inflation risks and an uncertain growth outlook. The MPC voted 4:2 to retain the neutral stance adopted in October, signaling caution amid persistent high food inflation and global economic volatility.
The CRR cut comes as the RBI continues its efforts to stabilize the rupee, following significant forex market interventions. This adjustment aims to offset some of the liquidity challenges caused by these interventions while ensuring that the system remains stable.
Das acknowledged the recent slowdown in growth but maintained optimism about the revival of capital expenditure and the positive impact of monsoon seasons.
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