TNI Bureau: The Reserve Bank of India (RBI) cut the reserve ration (CRR) by 0.25 per cent, but kept the interest rates unchanged at 8 per cent. The cut in CRR is likely to allow the banks to bring down the lending rates and improve investments.

The CRR will come down at 4.5 per cent. The move will inject about Rs 17,000 crore liquidity in the banking system.

The move came in the backdrop of the government decision to hike the diesel prices and allow the FDI in retail and aviation.

Even though, there is no sign of declining the inflation in the country, the central bank did not bring any change in repo rates and EMIs on loans.

The reverse repo remained at 7 per cent. The cut in CRR would be effective from September 22.

The policy has been lauded by the Prime Minister’s Economic Advisory Council (PMEAC), which called it as a ‘cautious move’ of the RBI.

The State Bank of India also called the policy as a very positive move. The banking analysts said that the RBI has taken a positive move to reduce inflation.