With feeble economic recovery now visible, State Bank of India (SBI), chairman, Pradip Chaudhuri on Monday said he expected 0.5 - 1 per cent cut in cash reserve ratio to pump prime the sagging economy. RBI’s money policy will be unveiled on January 29.

After clocking 8.4 per cent economic growth in 2010-11, India’s growth has slipped to 5.4 per cent in first half of 2012-13 and RBI has been more concerned with inflation that is much over its comfort zone of 4-5 per cent.

“CRR cut is more important and repo rate cut if it happens will be very useful. 50 basis points repo rate cut would be useful. CRR, I would request for a 50-100 basis points cut,” Chaudhuri said after attending pre-budget consultations with finance minister, P Chidambaram

“Only then, the rate of interest environment can come down significantly,” he said.

The RBI had last reduced short-term lending (repo) rate in April 2012 and stands at 8 per cent. In October, the RBI had reduced cash reserve ratio (CRR) — the portion of deposits banks have to mandatorily park with the central bank — by 25 basis points to 4.25 per cent.

Choudhuri also said the government has indicated a capital infusion of Rs 3,000 crore into SBI this financial year ending on March 31.

The capital infusion will be done through a preferential allotment of shares, he said adding the capital infusion in state bank subsidiaries will be done by State Bank of India.

The capital infusion would be part of Rs 12,000 crore infusion plan approved by the finance ministry recently. The Cabinet is likely to consider the bank re-capitalisation this week.