RBI CRR Hike

The Reserve Bank of India on Friday increased mandatory cash reserve of banks held by it by 75 basis points in a bid to suck excess Monetary PolicyHowever, short-term lending and borrowing rates between RBI and banks were kept unchanged, leading to speculation that banks' commercial lending rates may not change.
The apex bank also upped its economic growth projection to 7.5 per cent from its earlier estimate of 6 per cent for the current fiscal.
The 75-basis point increase in cash reserve ratio to 5.75 per cent is expected to suck out at least Rs 36,000 crore from the system. The move is to check food inflation spreading to other sectors.
The Reserve Bank of India (RBI) said the CRR would be increased by 50 basis points from February 13 and a further 25 basis points to 5.75 percent from February 27.
According to RBI estimate, inflation is likely to touch 8.5 per cent by this fiscal-end from over 7 per cent in December. Earlier in October, the apex had projected the rate of price rise to be at 6.5 per cent by March-end.

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