RBI governor D Subbarao said there is perhaps a need to bring down the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) further in the broader context of freeing resources for banks and enabling them to lend more to the industry.
?I do recognise there is a demand and perhaps need for further reduction but there has been a significant reduction,? Subbarao said in a speech at a banking conference on Tuesday.
CRR stands at 4% currently while SLR is at 23% of banks deposits. The governor pointed out that the CRR in 1991 was 15% while the SLR was a massive 38.5% of deposits.
RBI has cut CRR drastically in 2008-09 in the aftermath of the global financial crisis. In 2012-13, the CRR was cut by 75 bps to infuse liquidity and prod banks to cut lending rates.
The SLR was slashed by 100 bps following the financial crisis to 24% and later on again by 100 bps to 23%.