"I do recognise that there is a demand, and perhaps a need, for further reduction (in CRR and SLR)," he told the FIBAC summit, the premier annual banking summit here.

The Governor, however, added RBI has "progressively" brought down mandatory ratios on both CRR, or the portion of deposits banks park with RBI as a solvency buffer, and SLR, another solvency tool under which banks have to subscribe to government bonds and other liquid assets, over the years.

Subbarao, after a five-year tenure, will demit office on September 4 and new Governor Raghuram Rajan will assume office the next day.

Currently, the CRR is pegged at a low of 4 percent, while SLR that includes securities such as government bonds, stands at 23 percent, down from 25 percent in 2010.

There have been demands from bankers for further reduction of CRR.

Describing CRR as "dead money", SBI Chairman Pratip Chaudhuri had earlier said that if RBI could not reduce this requirement further, at least banks should be paid interest on this deposit.

While RBI has brought down short term lending rates by 125 bps since March 2012, there was only a 30 bps reduction by banks in their lending rates, as they have to attract deposits by paying high interest rates.

Though CRR and SLR have been retained at low level, to prop up rupee availability, the RBI since last month has increased the call money rates by 300 bps to 10.25 percent.

PTI