FX.co ★ Indian Central Bank Lowers Cash Reserve Ratio to Bolster Liquidity

In a strategic move to enhance liquidity in the banking system, India's central bank has lowered the Cash Reserve Ratio (CRR) from 4.00% to 3.00%, as confirmed on June 6, 2025. This crucial adjustment marks a significant step towards providing Indian banks with greater capital flexibility in response to evolving economic conditions.

The reduction in CRR by one percentage point is designed to infuse more funds into the banking sector, allowing financial institutions to extend additional credit to businesses and consumers. Lowering the CRR effectively reduces the amount of funds that banks are required to hold in reserve, thereby freeing up money for lending and investment purposes.

This adjustment reflects the central bank's proactive measures in addressing potential liquidity constraints and supporting economic growth amid global financial uncertainties. As India navigates through complex economic landscapes, this decision is expected to foster a more robust banking environment, enabling sustained economic activity and bolstering confidence in the Indian financial market.