Skip to content
Free updates Login
BankingNABARD / RBI

CRR Cut Demand: Treasury Heads Seek 4% and RBI OMO Plan

2 April 20251 min read
BANKING & FINANCECRR Cut Demand:Treasury HeadsSeek 4% and RBIOMO Plan2 April 2025safalsetu.com

Why in the news

Market participants wanted a lower cash reserve ratio so banks have lasting surplus liquidity, since tight funds blocked the effect of earlier rate cuts.

Key facts

  • Demand: CRR at 4%, adding at least ₹1.30 lakh crore.
  • CRR was last cut by 50 bps to 4.5% in December 2024.
  • Repo rate cut by 25 bps to 6.25% in February.
  • Next MPC review due April 7-9; another cut was expected, but needing liquidity support.

Banks’ dilemma

  • Lending rates fell after the repo cut, but scarce liquidity stopped deposit rate cuts, squeezing margins.

OMO purchase plan

Four tranches of ₹20,000 crore each, on April 3, 8, 22 and 29.

Exam angle

  • Proposed CRR: 4%; repo: 6.25%.
  • OMO purchases inject rupee liquidity.

Test yourself

1. To what level did treasury heads urge the RBI to reduce the Cash Reserve Ratio?

They asked for a 4% CRR to release at least ₹1.30 lakh crore.

2. How many OMO purchase tranches did the RBI announce, totalling ₹80,000 crore?

Four tranches of ₹20,000 crore each were scheduled.

3. By how much did the RBI cut the repo rate in February, taking it to 6.25%?

The cut was 25 bps, the first in nearly five years.

This topic is part of Daily Current Affairs 2 April 2025 (21 topics).

All topics of the dayDay quizApril 2025

Read more