CRR rate cut may prompt lenders to lower interest rates
By Vaibhav Aggarwal
Jan 25, 2012
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The Reserve Bank of India has reduced the Cash Reserve Ratio rate by 50 basis points in the monetary policy review, yesterday. The interest rates were however kept constant.

The reduction in CRR is likely to prompt the lenders to lower the deposit as well as lending rates offered by them.
The Chairman of State Bank of India, Mr. Pratip Chaudhury said, "With so many tax saving instruments offering interest rates in the 8.3-8.5 per cent range, one has to be really circumspect about cutting deposit rates."

The Chairman and managing Director of Bank of Baroda, Mr. M. D. Mallya said, "It (CRR cut) would inject liquidity to the extent of Rs 32,000 crore into the system. Therefore, to that extent banks would have sufficient funds to meet credit requirements of the productive sectors of the economy."

After the reduction CRR now stands at 5.50%.


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