Key Demands from Treasury Heads & Asset Managers
- Lower the Cash Reserve Ratio (CRR) to 4% to infuse at least ₹1.30 lakh crore into the banking system.
- Ensure durable surplus liquidity to support effective monetary transmission of policy rate cuts.
- Address tight banking liquidity, which has prevented banks from lowering deposit rates despite the repo rate cut in February.
Current Liquidity & Rate Challenges
- Daily Average Banking Deficit: ₹1.32 lakh crore in March, creating pressure on banks.
- CRR Reduction History: Cut by 50 bps (to 4.5%) in December 2024.
- Repo Rate Cut in February: Lowered by 25 bps to 6.25% (first reduction in nearly 5 years).
- Banks’ Dilemma:
- Repo rate cut forced them to reduce lending rates (home loans, MSME credit).
- But tight liquidity prevented deposit rate cuts, squeezing margins.
Upcoming RBI Policy Review & Expectations
- The next Monetary Policy Committee (MPC) review is scheduled between April 7-9.
- Economists anticipate another rate cut, but treasury heads insist it must be accompanied by liquidity support.
RBI’s Liquidity Measures: ₹80,000 Crore OMO Announced
- Open Market Operations (OMO) Purchase Plan:
- Total amount: ₹80,000 crore
- Four tranches:
- ₹20,000 crore each on April 3, 8, 22, and 29
- Aims to address liquidity constraints in the banking system.
TET
