By Cherian Thomas Oct. 10 (Bloomberg) -- India's central bank deepened a cut in the amount of cash lenders need to set aside as reserves to cushion Asia's third-largest economy from a global slowdown. The Reserve Bank of India reduced the cash reserve ratio to 7.5 percent from 9 percent effective tomorrow. The measure will release 600 billion rupees ($12.2 billion) into the financial system, the bank said in a statement in Mumbai. The move by Governor Duvvuri Subbarao comes after the Federal Reserve, the European Central Bank, the People's Bank of China and other monetary authorities slashed rates this week to avert a global recession. India's bonds rallied while the benchmark Sensitive index, which fell as much as 9.6 percent today, pared losses, after the announcement. Today's cut extends the 50 basis point reduction in cash reserves the Reserve Bank announced on Oct. 6, the first reduction in five years. To contact the reporter on this story: Cherian Thomas in New Delhi at Cthomas1@bloomberg.net.

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