Incremental CRR move to help suck out Rs 1 trn of excess liquidity: Das

Reserve Bank Governor Shaktikanta Das on Thursday said the move to impose a 10 per cent incremental cash reserve ratio for a limited period will help suck out Rs 1 lakh crore of excess liquidity from the system.

The move, announced along with the bi-monthly policy review, was the best option under the current circumstances and there is enough liquidity in the system for the banks to continue their lending operations, Das told reporters.

While announcing the move, Das had said the return of Rs 2,000 notes since May 19 this year, has led to instances of excess liquidity for which the move was being introduced.

Replying to a question on whether it will also include the impact of the merger of HDFC with HDFC Bank, Das said the move is applicable to all scheduled banks.

Das said the recent spike in consumer price inflation is driven by food inflation and is expected to be short-lived if we were to go by past instances.

However, if these idiosyncrasies persist and become generalised, the RBI will act, Das said, adding that it may not just be a rate hike, but be a move like the incremental CRR announced earlier in the day.