Reserve Bank will continue to use cash reserve ratio

The Reserve Bank of India (RBI) will continue to use cash reserve ratio (CRR) as its monetary policy tool and transmission is not very effective if only rates are used, a deputy governor said on Wednesday.

Subir Gokarn also said the Reserve Bank prefers to act in small steps, non-disruptively.

The central bank on Tuesday raised key interest rates by 25 basis points and said further rises were likely as it moves to return monetary policy towards pre-crisis settings and battles near double-digit inflation.