NEW DELHI India's Central Bank on Saturday cut banks' cash reserve ratio to 7.5 percent from eight percent to boost liquidity in the banking system, AFP reported.

The Reserve Bank of India said in a statement that the CRR or the ratio of cash that banks are required to hold as a proportion of assets, was cut by half a percentage point to free up more money for lending.

The cut will come into effect on May 19 and is expected to release roughly 45 billion rupees ($978 million) into the economy, the statement added.