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 percent.

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.

(Agencies)

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