The Reserve Bank of India needs to bring down the cash reserve ratio (CRR) and control credit flow through open market operations, C. Rangarajan, chairman, Prime Minister's Economic Advisory Council, said on Thursday.
The CRR is the proportion of deposits banks must set aside with the central bank.
Mr. Rangarajan also expressed optimism that the country will return to 8 per cent growth in two years.
“Growth rate will be better than last year, and should return to 8 per cent in two years,” he said.
Earlier this month, the country's largest public sector lender State Bank of India had sought scrapping of CRR, which stands at 4.75 per cent.
With inputs from Reuters
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