In order to inject liquidity into the banking system, the Reserve Bank of India, announced reduction in Cash Reserve Ratio (CRR) of Scheduled Banks by 50 basis points from 6.00% to 5.50% of their Net Demand and time Liabilities (NDTL) effective the fortnight beginning 28th January, 2012. This move is going to inject around 320 billion liquidity into the banking system.
CRR is the amount of funds that the banks have to maintain with RBI. Under Section 42 of RBI Act, 1934, Reserve Bank uses CRR as a tool to regulate and control the money supply in the banking system.
Source : RBI website.