Parliament approves bill on CRR

By agencies   |   Thursday, 18 May 2006, 07:00 Hrs
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NEW DELHI: Parliament on Thursday approved the long-awaited amendment to the RBI Act giving the central bank more flexibility to fix Cash Reserve Ratio, an instrument used to regulate liquidity in the market.

The Reserve Bank of India (Amendment) Bill was passed by the Rajya Sabha by voice vote after virtually all sections supported the legislation. The Lok Sabha passed the bill on Wednesday.

At present, there is a floor of three per cent for CRR and a ceiling of 20 percent. The amendment lifts both the floor and the ceiling for CRR enabling the central bank to fix CRR lower than three per cent. The bill also changes the definition of repo and reverse repo to bring about uniformity. It also provides for legal validity to trading in derivatives.

Regarding members' concern over the IPO scam, Bansal said the Government has taken certain determined steps.

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