..........There is no merit in the case for abolishing CRR: (a) it is a kind of reserve – however small – that needs to be maintained as a prudential measure for an exigency; and (b) it is needed as a monetary tool for RBI to modulate liquidity in the system. Therefore, the better course for RBI would be to maintain the status quo, but compensate banks to some extent by paying a nominal interest at 50 per cent of its repo rate.
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