"Space for (more) CRR cut still exists as we need to see significant fall in aggregate deficit," RBI deputy governor Subir Gokarn told reporters on the sidelines of a function. He did not indicate any timeline for the cut.
Gokarn, however, ruled out any cut in the SLR saying, "Reducing SRL will not create any additional capacity in the system at this point of time, because of there is surplus.
If SLR is close to the limit, then a reduction is possible, and may have created capacity. But given the situation all instruments are on the table."
On January 24, RBI had cut CRR by 0.5 percentage points to 5.5 per cent, releasing Rs 32,000 crore into the system. Since then, the fund crunch has only worsened.
Last Thursday, the strain on the system rose to high of Rs 1.02 lakh crore. And going forward it will only increase as by March 15 companies will have to make advance tax payments which will drive out Rs 60,000 crore from the system.
Another Rs 12,000 crore is likely to go out of banks due to the ONGC auction last week, and a similar amount will be drained out on account of excise duty payment by companies.
Stating that liquidity deficit is partly structural and partly temporary, Gokarn said, "Current call rates suggest that things are relatively stable (since) there is arbitrage in the market.
"Banks which have surplus SLR can borrow at the LAF (liquidity adjustment facility) and lend through call (money) market to banks which do not have excess SLR. So, the fact that SLR is skewed is not a cause of concern."