The Reserve Bank of India on Friday announced a significant 1% cut in the Cash Reserve Ratio (CRR), aimed at injecting Rs 2.5 lakh crore into the banking system to support lending to productive sectors of the economy.

The reduction will be implemented in four equal tranches, concluding by November 29, 2025. Once completed, the CRR will stand at 3%, allowing commercial banks to hold less cash with the RBI and freeing up more funds for lending purposes.

Announcing the bi-monthly Monetary Policy Committee (MPC) outcome, RBI Governor Sanjay Malhotra said, “The Reserve Bank remains committed to ensuring adequate liquidity in the system. To further enhance durable liquidity, it has been decided to reduce the CRR by 100 basis points to 3% of net demand and time liabilities (NDTL), in a phased manner during the year.”