Letter to BS: Time has come to review CRR as credit control instrument

This refers to “Neither affordable, nor relevant” by Deep Narayan Mukherjee (January 22). The author is right in asserting that the time has come to review the cash reserve ratio (CRR) as an instrument of credit control. The central bank has long abjured the practice of using either CRR or bank rate as an instrument of intervention. When repo and reverse repo are being used as a signalling mechanism, it makes sense to gradually dismantle the CRR mechanism or at least start paying reasonable rate of interest on the balances maintained by banks. 

Ganga Narayan Rath, Hyderabad

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