RBI to use CRR as active liquidity tool

India's central bank plans to use the cash reserve ratio (CRR) more frequently to manage liquidity and aid policy transmission, rather than deploying it only during extreme cash swings, a person aware of the matter said.

- Reuters

The person declined to be identified because they are not authorized to speak to the media. The Reserve Bank of India (RBI) did not reply to an email seeking comment.

Last week, the RBI announced a surprise 100-basis-points reduction in CRR, the portion of deposits banks must park with the RBI, in four equal tranches, taking it down to 3%.

The move will release ₹2.5 trillion ($29.25 billion) into the banking system.