September 25, 2018 / 9:22 AM / in 3 months

Cutting cash reserve ratio can improve India liquidity - finance ministry official

NEW DELHI, Sept 25 (Reuters) - Cutting banks’ cash reserve ratio (CRR), or the amount of funds they set aside with the central bank, are among options that the central bank could look at to improve liquidity in the system, a finance ministry official said on Tuesday.

The Reserve Bank of India could also consider buying more bonds from the open market and open a special window for mutual funds to inject liquidity, the official told reporters, declining to be identified as the discussions are not public.

Presently, the CRR is at 4 percent of banks’ total deposits.

After the comments, the 10-year benchmark bond yield eased 1 basis point to 8.12 percent from before the news. (Reporting by Manoj Kumar; Editing by Krishna N. Das)

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