RBI to infuse Rs 3.74 lakh cr liquidity into financial system

By: |
Published: March 27, 2020 11:41:12 AM

Financial markets are under stress and require steps by the central bank for market stability and revival of economic growth, he said while announcing the decisions taken by the Monetary Policy Committee (MPC) here.

RBI, Reserve Bank Governor, Shaktikanta Das, covid 19 pandemic, Monetary Policy Committee, CRR, banking systemAs part of liquidity infusion measures, he said, the Reserve Bank of India (RBI) will undertake repo operation of up to Rs 1 lakh crore to infuse liquidity into the market.

Reserve Bank Governor Shaktikanta Das on Friday said about Rs 3.74 lakh crore liquidity on aggregate basis will be infused into the financial system to deal with the COVID-19 pandemic.

Financial markets are under stress and require steps by the central bank for market stability and revival of economic growth, he said while announcing the decisions taken by the Monetary Policy Committee (MPC) here. As part of liquidity infusion measures, he said, the Reserve Bank of India (RBI) will undertake repo operation of up to Rs 1 lakh crore to infuse liquidity into the market.

Further, he announced reduction in cash reserve ratio (CRR) of all banks by 100 bps to 3 per cent from 4 per cent, with effect from March 28 for one year. This is expected to release Rs 1.37 lakh crore liquidity in the market, he said.
CRR is the percentage of deposits that banks have to mandatorily keep with the central bank.

RBI last reduced CRR on February, 2013, by 25 basis points. In all, Rs 3.74 lakh crore liquidity to be injected into system through the measures announced today (Friday), he added. The governor also assured the public that the banking system in India was safe.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Crisil cuts FY21 India growth forecast by 170 bps to 3.5%
2Addressing Covid-19 distress: Package for poor mindful of fisc
3Default fears: Bulk downgrades since January add to firms’ coronavirus pain