Interest rates in India are very high — higher than most parts of the world — both because of high policy rates and because of the high margin that banks charge. These margins can be brought down by reducing the cash reserve ratio (CRR) that the RBI increased this financial year when there was a risk of overheating. The increase that was implemented should be reversed during this financial year through a pre-announced timetable. If there is a need to tighten liquidity, it can be done through selling Market Stabilisation Scheme bonds.
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