RBI cuts bank rate by 0.5 per cent

By Our Special Correspondent

MUMBAI, FEB. 16. The Reserve Bank of India (RBI) today cut the bank rate and the credit reserve ratio (CRR) by 0.5 per centage point.

The bank rate was cut from 8 to 7.5 per cent with effective close of business today.

The CRR is cut from 8.5 to 8 per cent, in two stages by 0.25 percentage points each, effective from the fortnights beginning February 24 and March 10.

``This measure would release resources of scheduled commercial banks to the extent of about Rs. 2,050 crores at each stage,'' said a press release.

The decisions followed a review of recent developments in the international and domestic financial markets.

The financial markets were expecting a rate cut from the beginning of this calender year on the back of the U.S. Federal Rate cut announced by Mr. Alan Greenspan, chairman, Federal Reserve.

The U.S.' move was aimed at rejuvenating the economy.

A slowdown in the U.S. economy has taken its toll on the Indian economy also and the present move by the RBI is a measure to counter it.

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