The Reserve Bank of India (RBI) has cut the Cash Reserve Ratio (CRR) by 50 basis points to 4%, injecting Rs 1.16 trillion into the banking system. The decision has led to positive movement in the stock market, especially in public sector bank (PSU) stocks, as the liquidity infusion is expected to aid lending and support economic activity.

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• RBI cuts CRR by 50bps, lowering it to 4%, to improve liquidity in banking system.
• The move injects Rs 1.16 trillion into the system, aiding bank lending and supporting economic activity.
• PSU bank stocks rise, with the Nifty PSU Bank index up by nearly 2%.
• Uco Bank, Indian Overseas Bank, Canara Bank, and Union Bank among top performers, gaining 2%-2.5%.
• Liquidity infusion helps banks with working capital management, especially MSMEs.
• The RBI maintains the repo rate at 6.5%, signaling no immediate changes despite growth slowdown.
• Inflation outlook revised up to 4.8% for FY25 from 4.5%, with target of 4% by Q2 FY26.
• CRR cut expected to ease banks’ cost of funds, boost financials, and improve market sentiment.
• RBI remains focused on balancing inflation control with supporting economic growth.
• Experts predict the liquidity boost will aid sectors like NBFCs, auto, infrastructure, and real estate.