09 december 2006

rbi hikes banks' cash reserve ratio by 50 basis points to 5.5 per cent
mumbai: the reserve bank has announced an increase in the cash reserve ratio (crr) of banks by 50 basis points, to be made effective in two stages, as part of the measures to tighten liquidity and contain inflationary pressures.

the crr, applicable to scheduled commercial banks, regional rural banks, scheduled state co-operative banks and scheduled primary (urban) co-operative banks, will be raised to 5.25 per cent from december 23 and to 5.5 per cent from january 6, 2007, rbi said in a statement.

the crr hike would absorb about rs13,500 crore of banks' resources, the rbi said.

inflation, meanwhile, has declined to 5.30 per cent in the week ended november 25 from 5.45 per cent the previous week.