In a major move to inject an additional estimated Rs. 85,000 crore into the system, the Reserve Bank of India on Saturday cut key deposit requirements for banks by one percentage point and its short-term lending rate by 0.5 percentage point, a decision that may help soften general interest rates. The decisions to cut the cash Reserve Ratio by 100 basis points each and the repo rate by 50 basis points come a week after the busy season credit policy review by the RBI, in which it had given an assurance of more measures to boost economic growth. The RBI would continue to closely monitor development in global and domestic financial markets and take swift and effective action as appropriate. With the latest measures, the RBI has pumped about Rs. 2.70 lakh crore into the system since October but industry leaders and bankers feel more is needed to effectively bring down the commercial lending rates.
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