India may pause on liquidity easing steps

India may not take further steps to infuse liquidity in the banking system in next 7-10 days as the cash situation has improved following a series of moves by the Reserve Bank of India RBI, a finance ministry official said on Friday.

8220;The current liquidity situation is adequate and there is no need for more liquidity infusion over the next 7-10 days,8221; said the official, who did not wish to be identified.

8220;There was a headroom in the cash reserve ratio but we cannot go on cutting CRR indefinitely.8221;

The central bank cut the CRR twice in a week, slashing it by 250 basis points to free up 1 trillion rupees 20.5 billion in funds.

State-run banks have headroom for raising Tier-II debt up to 770 billion rupees, the official said, without giving a timeframe.