The RBI has increased the CRR by 0.5% to 7.5%.
This essentially means that the banks will have to increase there deposits in RBI by half a percent. The RBI will mop up Rs 16,000 Crore through the move. The banks in the process will have less funds to lend.
Thank you Mr Reddy for this little step to control inflation and the dollar-rupee exchange rate. But no thanks Mr Reddy from people like me who have lost the last hope of home loan interest rates softening any time in the near future!
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May be, we need to look at the broader picture. If RBI won't take the corrective measure to slow down the rise of Rupee against dollar, it would hurt the exports, which may hurt the jobs, the rising economy. It is a double edged sword, the consumer would get hurt anyway.
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