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[hfe_template id='11223'] [ad_1] ETMarkets.com In the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) meeting on December 6, 2024, the cash reserve ratio (CRR) was reduced from 4.5% to 4%, releasing additional liquidity into the banking system. This move is expected to enhance the lending capacity of banks, supporting credit growth and economic recovery. On the other hand, the repo rate was maintained at 6.5%, reflecting a balanced approach to managing inflation, but the subdued GDP projections and ongoing inflationary pressures may limit the broader economic recovery. The CRR cut is expected to boost systemic liquidity, enabling banks to meet credit demand across key sectors. As systemic credit growth moderates to an estimated 10.5% YoY for FY25, the additional funds are poised to play a critical role in revitalising demand, particularly in retail and small business segments. Furthermore, the anticipated start of a rate-cut cycle in early 2025 could prov...

[hfe_template id='11223'] [ad_1] Mumbai: The Reserve Bank of India (RBI) injected funds into the banking system as the weighted average call rate, a barometer for short-term borrowing costs, rose 23 basis points above the policy repo rate at 6.73% on Friday. Surplus liquidity in the banking system shrank to ₹84,154.75 crore due to monthly GST outflows. This is akin to a fine-tuning exercise to manage call rates near the repo rate, as monthly tax outflows drew surplus liquidity out of the banking system, money market experts said. The RBI injected funds worth ₹25,000 crore via a variable rate repo auction (VRR) to ensure that recent overseas outflows from local debt and equity do not drive up banks' cost of funds, analysts said. This is the second such auction that the RBI has conducted post its change in stance to neutral from withdrawal of accommodation. On Thursday, surplus liquidity - as measured by absorption of funds by the RBI - dropped to a one-month low of ₹8...