Begin typing your search...

CRR hike irks banks

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) decision suck out over Rs1 trillion from the system, which will result in loss of income for the banks and hardening of the money market, said experts. Post this announcement, Bank Nifty slipped into weakness.

image for illustrative purpose

CRR hike irks banks
X

11 Aug 2023 10:21 AM IST

Chennai The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) decision suck out over Rs1 trillion from the system, which will result in loss of income for the banks and hardening of the money market, said experts. Post this announcement, Bank Nifty slipped into weakness.

The MPC at its meeting decided that all scheduled banks should maintain an incremental cash reserve ratio (I-CRR) of 10 per cent on the increase in their net demand and time liabilities (NDTL) between May 19, 2023 and July 28, 2023, said RBI Governor Shaktikanta Das.

According to Das, the measure will take out over Rs one trillion from the system. Experts also give a figure of about Rs 1.3 trillion.

The CRR is the percentage of deposits that a bank should have in cash to operate risk free. This amount is kept with the RBI. Post MPC’s decision, the effective CRR is expected to be 14.5 per cent as the current CRR is 4.5 per cent.

“Post this announcement (I-CRR), Bank Nifty slipped into weakness as this announcement is negative for banks. Higher forecast of inflation also doused hopes of an early beginning of rate cut impacting bank stocks,” Dhiraj Relli, MD & CEO, HDFC Securities said.

RBI CRR MPC 
Next Story
Share it