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CRR now 6.5%...

The RBI is trying hard to inject more cash in the market...So there's another prompt cut in the CRR... 

CRR is the reserve that a bankhas to keep with RBI , if it gets cut, it means the banks will have more liquid cash... 

What the CRR Cut will do?

  • This CRR cut will infuse Rs 40,000 crore (Rs 400 billion) into banking system.
  • The RBI also increased interest rates on Non-Resident deposit schemes by 50 basis points, or 0.5 per cent that means fetching more money from them...
  • The Indian interbank unsecured money market has been functioning normally. 
  • Average daily volumes in the overnight call money market, at about Rs 14,000 crore (Rs 140 billion) in October 2008 have in fact been somewhat higher than those observed in the previous six month period.

Other  RBI measures:

(i)  The cash reserve ratio (CRR) of scheduled banks is currently at 7.5 per cent of their net demand and time liabilities (NDTL). now it is 6.5%, the measure will release additional liquidity into the system of the order of Rs 40,000 crore (Rs 400 billion).

(ii)  RBI has decided to conduct  a special  14  day  Repo at 9 per cent per annum for a notified amount of Rs 20,000 crore (Rs 200 billion) with a view to enabling banks to meet the liquidity requirements of mutual funds. 

(iii) RBI has instituted a mechanism of Special Market Operations (SMO) for public sector oil marketing companies in June-July 2008 taking into account the extraordinary situation then prevailing in the money and forex markets.  


RBI will institute  a similar facility when oil bonds become available.

(iv) Under the Agricultural Debt Waiver and Debt Relief Scheme Government  had agreed to provide to commercial banks, RRBs and co-operative credit institutions a sum of Rs 25,000 crore (Rs 250 billion) as the first instalment. 

At the request of the Government, RBI has agreed to provide the sum to the lending institutions immediately.  

(v) Interest Rates on NRI Deposits increased

(vi) Banks will be allowed to borrow funds from their overseas branches and correspondent banks up to a limit of 50 per cent of their unimpaired Tier I capital.

 RBI is doing the best possible effort to keep the crisis away from India, hope the things come back to normal soon..!! 

Comments

M_U_K_U_N{U_V} said…
Han ji sir try to kafi ho rahi hai bus dekho kya hota hai?

Waise ise se unhone INFLATION pe to kuch had tak control pa hi lia hai na..

Or ise se Financial market me money bhi kafi aa rahi hai near about 100,000 cr this month app.
Anonymous said…
y not adding new posts???
Unknown said…
ankit if crr is cut down, den how the banks hv more liquid cash....is it is like dis.....CRR cut means banks hv to keep less amount with RBI and den dey hv more cash with themselves.......but ankit banks have the money which we investors gave them...to kya woh hamara hi money RBI ke pass rakhte hai and aur works ke liye use karte hai..........
Ankit Gupta said…
Hello samriti.. u didnt visit, so i didnt write.. :)
Ankit Gupta said…
Yes Mukun... ur opinion is right.. its a crunch... it'll take a lot of time..!!
Ankit Gupta said…
Actually CRR is a fund the bank needs to keep it with RBI.. if RBI would be requiring less funds.. it means banks will have less obligations.. they can disburse more loans..

For their working they have a chamber of working capital, basically slr/crr are related to loanable funds.. higher the crr is, lesser is the power of banker in meeting loan needs..
Ankit Gupta said…
Loan is always a demand... when these restrictions get lifted, bankers feel more free in sanctioning loan, though it can create inflationary conditions, but as of now, inflation prob is not tht big..!!
Kamran said…
Are you knowledgeable on matters regarding currency trading for Indians? I was reading a lot about it in the forums, a lot of people seem to be trading, but then I found this website which talks about forex trading in india so I am not sure. Can you advise on this topic?

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