India Cuts CRR for First Time Since 2020

The Reserve Bank of India (RBI) reduced the Cash Reserve Ratio (CRR) by 50bps to 4.0% at its December 2024 meeting, marking the first such reduction since April 2020 and defying market estimates of no changes.

The move aimed to boost market liquidity.

Excess liquidity in the banking system has reportedly diminished due to the central bank's forex intervention and is expected to tighten further into mid-December ahead of advance tax outflows.

This reduction in the CRR is consistent with the neutral policy stance and would release primary liquidity of about Rs 1.16 trillion (USD 13.72 billion) to the banking system, said the RBI in a statement.

This reduction is effective in two tranches on December 14 and December 28.