STOCK MARKET WATCH -- Tuesday, 24 January 2012

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59. Indian central bank moves to boost economy

http://www.aljazeera.com/news/asia/2012/01/201212485838693997.html

India's central bank has cut the cash reserve ratio [CRR] for commercial banks by 50 basis points, reducing the percentage of cash they need to hold in reserve, in a move likely to inject billions of dollars into the banking system.

The Reserve Bank of India (RBI) governor Duvvuri Subbarao said on Tuesday the bank had shifted its focus towards promoting growth, while ensuring that inflationary pressures "remain contained".

However, the bank's repo rate, at which it lends to commercial banks, remained at a near four-year high of 8.50 per cent, while the reverse repo rate, that it pays banks for deposits, was unchanged at 7.50 per cent - its highest in more than a decade.

The CRR, which was last reduced more than three years ago, now stands at 5.5 per cent and is expected to pump 320 billion rupees ($6.27bn) into the banking system amid concerns about slowing growth in Asia's third-biggest economy due to a liquidity crunch.