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Reserve Bank cuts CRR for cooperative banks by 0.50 pc

In an inadvertent coincidence,as the state government came out with its new industrial policy,the Reserve Bank of India announced a reduction of fifty basis points...

Written by Tanvir A Siddiqui | Ahmedabad |
January 6, 2009 2:09:28 am

In an inadvertent coincidence,as the state government came out with its new industrial policy,the Reserve Bank of India (RBI) announced a reduction of fifty basis points in the Cash Reserve Ratio (CRR) for scheduled primary (urban) cooperative banks from 5.50 per cent to 5 per cent of their net demand and time liabilities. This will be effective from January 17,said an RBI notification,issued on Monday.

The decision has been taken following a review of the current global and domestic macroeconomic situation,said an RBI release. This will improve liquidity position of urban co-operative banks.

Since the announcement coincides with the new industrial policy,Gujarat State Urban Co-operative Banks Federation chairman Jyotindra Mehta has welcomed the move. “UCBs will have more funds available with them for disbursement to businessmen as well as small and medium enterprises,” he said.

Mehta added that in the long run,this would help in the growth of the state’s economy,as any boost to SME financing will prove beneficial for the economy.

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