
Though there's ample liquidity in the system, the distribution is highly asymmetrical. To tackle this,RBI has decided to reduce the cash-reserve-ratio (CRR) of all banks by 100 bps to 3 percent of net demand and time liabilities (NDTL) with effect from March 28 for a period of one year, to help the banks recover from the disruption caused by COVID-19 pandemic.
This reduction would release primary liquidity of about Rs 1.37 lakh crore uniformly across the banking system in proportion to liabilities of the constituents rather than in relation to their holding of excess SLR. The RBI also reduced the minimum daily CRR balance from 90 percent to 80 percent, effective March 28. This is a one-time dispensation available up to June 26, 2020.
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