RBI increases CRR to 8.75 percent

June 24th, 2008 - 11:04 pm ICT by IANS  

Mumbai, June 24 (IANS) The Reserve Bank of India (RBI) has increased the cash reserve ratio of banks by 50 basis points to 8.75 percent in two stages keeping in view “domestic and global macroeconomic and financial developments”, it was announced here Tuesday. The CRR of scheduled commercial banks, regional rural banks (RRBs), scheduled state co-operative banks and scheduled primary (urban) co-operative banks “is being increased by 50 basis points to 8.75 per cent in two stages”, an RBI statement said.

For the fortnight beginning July 5, the CRR on net demand and time liabilities will be raised to 8.50 percent and to 8.75 percent for the fortnight beginning July 19, the statement said.

“The repo rate under the Liquidity Adjustment Facility (LAF) is increased from 8.00 per cent to 8.50 percent with immediate effect,” the statement added.

The decisions had been taken in keeping with the RBI’s monetary policy “and on the basis of incoming information on domestic and global macroeconomic and financial developments”, the statement said.

“In view of the criticality of anchoring inflation expectations, a continuous heightened vigil over ensuing monetary and macroeconomic developments is warranted to enable swift responses with appropriate measures as necessary, consistent with the monetary policy stance,” the statement added.

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