New Delhi, Jun 6 (PTI) The Nifty Bank index hit its all-time high on Friday, rising 1.47 per cent, after the Reserve Bank decided to cut cash reserve ratio (CRR) by a huge 1 per cent, which will unlock Rs 2.5 lakh crore liquidity to the banking system for lending to productive sectors of the economy. With the reduction in four equal tranches ending November 29, 2025, the CRR would come down to 3 per cent. This means that the commercial banks would have to maintain a lower level of 3 per cent in liquid cash form with the RBI, allowing them to have higher funds for lending. The Nifty Bank index jumped 817.55 points, or 1.47 per cent, to settle at 56,578.40. Intra-day, it surged 934.15 points, or 1.67 per cent, to reach an all-time peak of 56,695. “Nifty reclaimed the 25,000-mark, rising 252 points after the RBI MPC delivered surprise double liquidity booster for the markets. The RBI front-loaded the monetary easing cycle as it announced a massive 50 bps cut in the repo rate (versus expected 25 bps), while changing the stance to ‘neutral’ from ‘accommodative’ given global growth challenges. “Additionally, it announced a 100-bps cut in the CRR, spread across four tranches, to infuse liquidity in the system. The announcement triggered a sharp rally in banking and financial stocks with Nifty Bank and Nifty Financial Services indices hitting all-time high levels,” Siddhartha Khemka, Head — Research, Wealth Management, Motilal Oswal Financial Services Ltd — said. The 50-share NSE Nifty reclaimed the 25,000-level and climbed 252.15 points, or 1.02 per cent, to settle at 25,003.05. “Bank Nifty hit a record high, buoyed by the Reserve Bank of India’s steeper-than-expected rate cut and reduction in the cash reserve ratio requirement as investors anticipated stronger credit growth and improved profitability for banks,” Satish Chandra Aluri, Analyst, Lemonn Markets Desk, said. The stocks of IDFC First Bank jumped 7.04 per cent, AU Small Finance Bank surged 3.94 per cent, Axis Bank climbed 3.15 per cent, IndusInd Bank went up 2.59 per cent, Bank of Baroda (1.66 per cent), Kotak Mahindra Bank (1.57 per cent), HDFC Bank (1.46 per cent), Punjab National Bank (1.01 per cent) and State Bank of India (0.83 per cent). “The Reserve Bank remains committed to provide sufficient liquidity to the banking system. To further provide durable liquidity, it has been decided to reduce the cash reserve ratio (CRR) by 100 basis points (bps) to 3 per cent of net demand and time liabilities (NDTL) in a staggered manner during the course of the year,” RBI Governor Sanjay Malhotra said, while announcing the bi-monthly MPC outcome on Friday. This reduction will be carried out in four equal tranches of 25 bps each with effect from the fortnights beginning September 6, October 4, November 1, and November 29, 2025, he said. “The cut in CRR would release primary liquidity of about Rs 2.5 lakh crore to the banking system by December 2025. Besides providing durable liquidity, it will reduce the cost of funding of the banks, thereby helping in monetary policy transmission to the credit market,” he said. “The Indian stock market responded optimistically to the RBI’s surprise and aggressive growth push policy. The tremendous rate cut and liquidity boost via the CRR cut is expected to facilitate swift transmission of lower rates, reinforcing the RBI’s strong commitment to fostering economic growth, boosting investment, and stimulating consumption. “Rate-sensitive sectors, including banking, real estate, automobiles, and consumer durables are leading the rally,” Vinod Nair, Head of Research, Geojit Investments Limited, said. PTI SUM TRB