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State Bank of India (SBI) expects the Reserve Bank of India (RBI) to cut the cash reserve ratio (CRR) by 1 percentage point to boost economic growth and improve the bottomline of banks.
“We are expecting a 1 percentage point cut in CRR. …We have made a request but it is for the RBI to take a call. We will be very happy if there is 1 percentage point cut. It will recharge investor sentiments, the economy and also stock markets,” Mr Pratip Chaudhuri, Chairman, SBI, told newspersons on the sidelines of a meeting here.
CRR is the portion of deposits that banks are required to keep with the central bank.
Mr Chaudhuri said CRR was a more effective tool in spurring growth than policy rate reduction by the RBI. “A CRR cut is six times more effective than a policy rate cut,” he said.
The SBI Chairman also highlighted that a CRR cut would improve the profitability of banks and reduce the Government's burden for re-capitalisation of banks.
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