Struggling to contain inflation within its targeted 5-5.5 per cent range, the Reserve Bank of India raised the cash reserve ratio (CRR) 50 basis points to 6.5 per cent from April 28 and the repo rate 25 per cent to 7.75 per cent with immediate effect.
With this, the central bank has raised the CRR thrice, by 150 basis points, and the repo rate five times, by 125 basis points, in the current financial year.
The CRR is the proportion of cash balances the RBI requires banks to park with it. The higher CRR will suck out Rs 15,500 crore from the banking system, adding to the Rs 27,500 crore drained through two previous increases.
|THE COST OF INFLATION CONTROL|
|March 30, 2007||CRR hiked by 50 bps to 6.5%; Repo rate hiked by 25 bps to 7.75%|
|Feb 14, 2007||CRR hiked by 50 bps to 6%|
|Jan 31, 2007||Repo rate hiked by 25 bps to 7.5%|
|Jan 31, 2007||General provisioning on standard commercial real estate loans, personal loans & capital market loans doubled to 2%|
|Dec 11, 2006||CRR hiked by 50 bps to 5.5%|
|Oct 31, 2006||Repo rate raised by 25 bps to 7.25%|
|July 25, 2006||Reverse repo and repo rates hikes 25 bps each to 6% and 7% respectively|
|June 8, 2006||RBI raises reverse repo and repo rates by 25 bps to 5.75% and 6.75%, respectively|
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