The RBI in its mid term monetary policy has announced a cut of 0.25% in Cash Reserve Ratio (CRR). So the new CRR will be 4.5%. Hence the banks will have to keep less money with the RBI and lend more. The amount that is expected to be released to the banking system will be approx. Rs.17000 crores.
This is possitive for borrowers since the banks having more money to lend may reduce their interest on loans.
The RBI has kept other rates unaltered (Repo and Reverse Repo rates).
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