CRR Hike and Impact on Indian Banks

January 29, 2010

The Reserve Bank of India (RBI) often likes to spring a small surprise, and today’s meeting was no exception. Contrary to market expectations, the RBI raised the CRR by 75bps v/s expectations of 50bps. RBI has raised its growth estimate for FY10 from 6% with an upward bias, to 7.5%.

The RBI raised its inflation projection, it has stated that inflation expectations are on the rise and warned of further upside risks emanating from: oil, below average monsoons in 2010, and capital flows. Read more