RBI cuts CRR by a steep 1%, to unlock ₹2.5 lakh crore to bank funds by December

RBI cuts CRR by 1%, unlocking ₹2.5 lakh crore for lending, boosting economic growth and improving liquidity.

Reserve Bank on Friday (June 6, 2025) decided to cut Cash Reserve Ratio (CRR) by a huge 1%, which will unlock ₹2.5 lakh crore liquidity to the banking system for lending to productive sectors of the economy.

With the reduction in four equal tranches ending November 29, 2025, the CRR would come down to 3%. This means that the commercial banks would have to maintain a lower level of 3 per cent in liquid cash form with the RBI allowing them to have higher funds for lending.

"The Reserve Bank remains committed to provide sufficient liquidity to the banking system. To further provide durable liquidity, it has been decided to reduce the cash reserve ratio (CRR) by 100 basis points (bps) to 3 per cent of net demand and time liabilities (NDTL) in a staggered manner during the course of the year," RBI Governor Sanjay Malhotra said, while announcing the bi-monthly MPC outcome.

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This reduction will be carried out in four equal tranches of 25 bps each with effect from the fortnights beginning September 6, October 4, November 1 and November 29, 2025, he said.

"The cut in CRR would release primary liquidity of about ₹2.5 lakh crore to the banking system by December 2025. Besides providing durable liquidity, it will reduce the cost of funding of the banks, thereby helping in monetary policy transmission to the credit market," he said.

Higher credit flow will help in boosting economic growth which hit a four-year low of 6.5% in FY'25.