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RBI advances date for CRR reduction to June 1

Reserve Bank of India has decided to advance the date for reduction in cash reserve ratio to fortnight beginning June 1 following a review of the present liquidity situation.

Banks will have to maintain CRR at five per cent against the present level of 5.5 per cent, RBI said in a release in Mumbai on Saturday.

In the Monetary and Credit Policy for 2002-03, it was proposed to reduce CRR by 50 basis points effective fortnight beginning June 15, 2002.

It was also indicated that in case there was an unexpected change in the liquidity conditions in the market, RBI may further advance the date.

The 50 basis point reduction in CRR is expected to release resources of scheduled commercial banks to the tune of Rs 60 billion.

RBI Governor Bimal Jalan, on May 9 when asked in Kolkata whether the apex bank would consider advancing the cut in CRR ahead of the June 15 schedule, said, "it can be done but at the moment it is not required because there is plenty of money available in the market."

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