RBI has been liberal with CRR

The Reserve Bank of India (RBI) has adopted a hawkish stance when it comes to the key interest rates. This stance has been unchanged given the country's high inflation rates. But it has been a little more liberal when it comes to liquidity levels. These are essentially regulated by the Cash Reserve Ratio or the CRR which is the amount of funds that the banks have to keep with RBI. As a result, any cut in the rate results in more funds available to the banks that they can lend out. The RBI has cut the CRR rate 3 times this year. This has injected liquidity in the monetary system. However, till such time as the headline inflation comes within RBI's acceptable limits, it is unlikely that it will touch the repo rate or the benchmark interest rates in the country.