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Economists welcome RBI move to withdraw ICRR in a phased manner
The Reserve Bank of India's decision to discontinue the Incremental Cash Reserve Ratio (ICRR) in a phased manner is seen as a prudent move by experts. The ICRR withdrawal had caused a liquidity shortage in the banking system, but the RBI plans to gradually infuse the withdrawn liquidity back into the system. This phased approach is aimed at managing liquidity during the festive season and avoiding any immediate impact on short-term rates. Overall, the move demonstrates the RBI's focus on using market mechanisms to manage liquidity surpluses.
