NEW DELHI: In a move to further ease the liquidity situation, the Reserve Bank of India (RBI) on Thursday announced a 100 basis points reduction in the Cash Reserve Ratio (CRR) in a staggered manner through the remainder of 2025. This cut, from 4% to 3% of net demand and time liabilities (NDTL), is expected to release around ₹2.5 lakh crore of primary liquidity into the banking system by November.
Governor Sanjay Malhotra said the CRR reduction is aimed at easing the cost of funds for banks and accelerating the transmission of monetary policy rate cuts to borrowers. “Besides providing durable liquidity, it will also reduce the cost of funding of the banks, thereby helping and accelerating the monetary policy transmission to the credit market,” Malhotra said in the post-policy address.
The liquidity conditions have already moved from deficit to surplus, supported by multiple rounds of liquidity infusion by the RBI since January 2025, including open market operations, CRR cut, buy-sell swaps, and variable rate repo windows. These efforts have injected ₹9.5 lakh crore in durable liquidity, Malhotra noted.