RBI raises CRR by 75 basis points to 5.75 per cent

The Reserve Bank of India (RBI) today hiked the mandatory cash reserve of banks held by it by 75 basis points in a bid to suck out excess liquidity to counter rising inflation.

The central bank has, however, left the short-term lending and borrowing rates between RBI and banks unchanged, which has triggered speculation that banks' commercial lending rates may not change.

With the hike, the RBI has followed similar moves by central banks across Asia in cutting back on the ultra-loose monetary regime introduced in the wake of the downturn.

China tightened policy this month, raising banks' reserve requirements and accepting higher yields at bill auctions, and on Thursday, the Phillipines increased a short-term lending rate.

Australia was the first Group 20 country to hike rates with the Reserve Bank of Australia raising its key cash rate by 75 basis points since October.

The apex bank also enhanced its economic growth projection to 7.5 per cent from the 6 per cent it estimated for the current fiscal, earlier.