Fixed income Report:(Rupee impact) Is the CRR cut 3 years too late!

A 75 bp cut to ensure Liquidity remains, should be another half a Trillion rupees ( Indian) into the system or $10 bln of liquidity if banks take it out  or RBI deposits.

The 75 bp cut shows that RBI cannot consider OMOs any more and is likely to be a semipermanent action till there is a liquidity run consequent to any substantial inflation run even on imported oil and seems unlikely will ever be rolled back. Banks may need to roll new products or focus on new industry to lend this out from the new non reserve funds available as the substantial amounts cannot be deployed in the current NBFC/Infrastructure or even the planned retail growth . However banks may stilll lose that last option.

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