RBI cuts Indian banks' reserve ratios

In a surprising move, the Reserve Bank of India RBI reduced its cash reserve ratio CRR by 75bp after market hours on Friday, cutting it to 4.75% from 5.5%, effective today.

Consensus expectations were for a 50bp reduction ahead of the key March 15 policy meeting, and total cuts of 100bp for the whole of this year.

It was the first time the RBI had cut the CRR the level of deposits banks have to set aside outside of a policy meeting since July 2010. It last cut the ratio by 50bp on January 24, and it is now at the lowest level since 2004.

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