Jan 31 2010
What is Cash Reserve Ratio (CRR)?
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Last week RBI has increased the CRR rates by 0.75. If you are not aware of what is CRR, this article will provide you basic idea on how the CRR will impact the finance market.
Every bank in India has to maintain the some portion of money with the Reserve Bank of India(RBI). If the percentage of CRR is increased, banks will be parking more money to RBI. It leads to less liquidity with the banks, results in tightening the monetary policy. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks.
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Sunil said:
Krishna,articles are not detailed one…
January 31st, 2010 at 9:30 pm
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[...] bank HDFC Bank has increased the fixed deposit rates by 150 points. Earlier I have posted about the CRR Ratio hike by the Reserver Bank of India(RBI). As I have explained in the post. CRR hike will reduce the liquidity of the banks and will tighten [...]
[...] home loans provider HDFC and ICICI has rolled back the two year fixed rates scheme. Few weeks back RBI had hiked the CRR rates by 0.75%. It reduces the liquidity in the system and tightens the monetary policy. It leads to banks revise [...]