New Delhi: In a bid to suck out excess liquidity to further contain inflation, Reserve Bank India (RBI) has increased the cash reserve ratio (CRR) again.
The second phase of the increase CRR by 25 basis points comes into affect from Saturday, absorbing about Rs 7,000 crore from the banking system and putting further pressure on liquidity conditions.
On February 13, RBI had announced the decision to increase the proportion of deposits that banks must park with it to 6 per cent in two phases from 5.5 per cent earlier. The first stage came into affect on February 17.
RBI's move was part of steps being taken to tame inflation, which stood at 6.05 per cent for the week ended February 17 from 6.73 per cent on February 3.
According to RBI, the two-stage hike would absorb Rs 14,000 crore from the banking system.
In the last three months, the apex bank has raised CRR twice to suck out Rs 13,500 crore. The previous hike of 0.5 per cent was also effected in two spells – on December 23, 2006 and January 6, 2007.
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