The Reserve Bank cut cash reserve ratio (CRR) twice since April, 2010 in its monetary policies to contain inflation and help credit growth, Parliament was informed today.
"Since April 2010, the CRR has been changed twice by the RBI -- in January, 2012, it reduced 50 basis point from 6% to 5.5% and in March, 2012 it did from 5.5% to 4.75%," the Minister of State for Finance Namo Narain Meena said in a written reply to the Lok Sabha.
The main purpose of reducing CRR, he said, is injection of primary liquidity in the system so as to assist the flow of credit growth, anchoring the medium-term expectation to lower and stable inflation.
In view of slowdown in growth, especially investment activities and expected moderation in inflation, the RBI decided to pause repo rate hike besides keeping policy rates unchanged.
"To contain inflation, anchor inflationary expectations, the RBI cumulatively raised the policy rates 13 times by 375 bps between March 2010 and October 2011," Meena said.
