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RBI Hikes CRR Again

March 30, 2007

The Reserve Bank of India has hiked the CRR by 50 bps to 6.5% to be effective in two phases – 0.25% from April-14th and another 0.25% from April-28th. The move will suck Rs 15,500 crore from the system. The last time RBI had hiked was in Feburary.

RBI has also has hiked the repo rate by 25 basis points (bps) to 7.75% with immediate effect. This means borrowing cost of Banks will go up and will hit their bottomline. Adding to the banking sector woes, RBI has also decreased the rate of interest on CRR desposits from 0.5% to mere 0.25%.

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