The CRR joke

Eventually, State Bank of India chairman Pratip Chaudhuri had the last laugh (or a bit of it): The Reserve Bank of India (RBI) passed over on a rate cut and opted for a reduction in the cash reserve ratio (CRR). Chaudhuri had questioned the relevance of the ratio, crossing swords with RBI deputy governor K.C. Chakrabarty. The engagement between the two drew even RBI governor D. Subbarao into the debate. The central bank was setting up a committee to look at the issue, he said, in mock-seriousness, and its members, Chakrabarty and Chaudhuri would be locked in a room till they reached a conclusion. At the time, bank stocks shot up in anticipation as some news agencies jumped the gun after the first part of the joke, only to ease back after the punchline. On Monday, the governor went ahead and cut CRR. Only, this time, stock markets wanted much more and weren’t amused.