RBI has hiked CRR by 75 bps, this move will implemented in two stages. In first step it will hike by 50 bpt and in next move it will hiked by 25 bps more. The step taken by RBI was unexpected by bankers because banks had expected it to hike by only 50 bps. This step has been taken to curb the inflationary pressure, because impact of inflation from food item is also touching to non food items and also fuel products too.
CRR hikes will also lead to rise in interest rate because banks have to keep 5.75% of their deposits with RBI in cash, so banks can't lend 5.75% of their deposit, so definitely less money to lend ,results in high interest rate. But still RBI has assured that this move will not give immediate rise to high interest rate. The other Rate repo, reverse repo all remain unchanged. To give boost to economy RBI has taken call on that , now future will answer how fruitful this step of RBI is?
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