MUMBAI, October 15, 2008 (AFP) – India’s central bank said Wednesday it was injecting a further 400 billion rupees (8.25 billion dollars) into the financial system by cutting the cash reserve commercial banks must hold to 6.5 percent. The move by the Reserve Bank of India is the third such cut in the past two weeks, bringing down the cash reserve ratio (CRR) from nine percent at the start of the month.
Last week the RBI announced an injection of 600 billion rupees into the financial system in two installments.
The RBI said it will also disburse 250 billion rupees immediately to commercial banks and credit institutions towards a farm waiver scheme.
It has also doubled the investment limit for overseas investors in corporate bonds to six billion dollars.
Under various measures, the bank has added 1,450 billion rupees to the system this month.
“The Indian inter-bank unsecured money market has been functioning normally… However, the continuing uncertain global situation is having an indirect impact on our financial markets,” the RBI said in a statement.
“We will monitor developments in the financial markets closely and respond swiftly, even pre-emptively to any adverse external developments impinging on do