The Reserve Bank of India Governor Bimal Jalan said on Monday the proposed cut in banks' cash reserve ratio will release around Rs 50 billion ($1.02 billion) of funds to the system.
Jalan was speaking to television reporters after unveiling the Monetary and Credit Policy for the year that began on April 1.
The policy cut banks' cash reserve ratio to 5.0 per cent effective mid-June from 5.5 per cent, and said that effective date could be advanced if the need arose.
It left the benchmark bank rate, which is used by commercial banks to price their loans, steady at 6.5 per cent but the central bank said it would consider a reduction of up to half a percentage point if conditions warranted.
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