The Reserve Bank of India (RBI) chief Duvvuri Subbarao said on Tuesday that "perhaps" there was a need to reduce the reserves that banks have to set aside via the cash reserve or the statutory liquidity ratios.
The cash reserve ratio, or the amount of cash lenders must deposit with the Reserve Bank of India, stands at a record low of 4 percent. Meanwhile, the statutory liquidity ratio, which includes securities such as government bonds, stands at 23 per cent.
Subbarao was speaking at a banking conference in Mumbai.
The RBI has recently tightened monetary conditions by raising short-term interest rates and draining cash in a bid to defend the rupee, but the currency has weakened nonetheless, sparking concerns the central bank would need to either raise the CRR or raise the key repo rate.
