SBI chairman said he expect the central bank to cut CRR by 1% to ease liquidity and lower interest rates

New Delhi: Amid economic slowdown and contracting growth in the manufacturing sector, the country's largest lender State Bank of India (SBI) said it expects 1% cut in cash reserve ratio (CRR) -- the portion of deposits that banks are required to keep with the central bank -- for boosting growth, reports PTI.

"We expect the RBI to cut CRR by 1%...It will ease liquidity significantly and lower interest rate," SBI Chairman Pratip Chaudhuri told reporters on the sidelines of an event in the capital.

The Reserve Bank of India (RBI) in its mid-quarter review of monetary policy on 18th June is widely expected to announce steps to boost sagging economic growth, which dipped to nine-year low of 6.5% in 2011-12.

As per the latest data released by the Central Statistical Organisation (CSO), the industrial production during April slowed to 0.1% from over 5.3% in the corresponding month a year ago.

According to the data, the capital goods output declined by 16.3% as against a growth of 6.6% in the same month last year. Mining output contracted by 3.1% in April, as against growth of 1.6% in the same month last year.

In order to ease liquidity position in the market, RBI had on March 9 cut CRR by 0.75% down to 4.75%.

In January, it had reduced CRR by 0.50% to unlock primary liquidity.

On the possibility of cut in short-term lending (repo) rate by RBI in its mid-quarter review, Chaudhuri said, "Repo rate cut is meaningless because is more symbolic and (its impact is) not very substantial".