The Reserve Bank of India (RBI) is widely expected to cut the Cash Reserve Ratio (CRR) by 25 basis points while keeping the repo rate on hold in its monetary policy review on Tuesday.

Repo, which currently stands at 8 per cent, is the rate at which the central bank lends money to the banks. CRR, which is currently at 4.25 per cent, is the portion of deposits that banks have to keep with the central bank.

Of 41 analysts polled by Reuters, 37 predicted that the RBI would keep the repo rate untouched at 8 per cent in its upcoming monetary review later this month.

Moderating inflation has raised hopes of rate cut by the Reserve Bank in mid-quarter review of monetary policy ton Tuesday,

However, a majority of analysts expect the central bank to slash the CRR for banks. Analysts believe that the ongoing tight liquidity condition will make the central back to lower the CRR.

M Narendra, chairman & managing director of Indian Overseas Bank, said, "... as on date since liquidity still has been slightly tight, I think there will be some more support to liquidity (through CRR cut).

Meanwhile, industry leaders have long been demanding a cut in interest rate, saying it would provide a much-needed boost to investment and economic growth. As the inflation has dropped to its ten-month low, industry leaders claim that it is the right for a cut in key interest rates.