The Reserve Bank of India (RBI) has decided to increase the Cash Reserve Ratio (CRR) by 50 basis points to 4.5 percent, Governor Shaktikanta Das said on Wednesday while making an unscheduled statement on monetary policy.
One basis point is one-hundredth of one percentage point.
CRR is the share of total deposit a lender needs to keep with the central bank as reserves in the form of liquid cash. The RBI increases the CRR to control the excess flow of money in the economy as the amount available with lenders to sanction loans comes down.
The total deposits in the system, as of April 8, 2022, was at Rs 1,67,42,309 crore. With the CRR hike, the RBI aims to withdraw liquidity to the tune of Rs 83,711.55 crore.
In a surprise policy announcement today, the RBI said its MPC decided to hike repo rate by 40 bps to 4.40 percent. The MPC has also decided to maintain 'accommodative' stance for now while focusing on its withdrawal and thus a reversal of the rate action in 2020 which saw 75 bps shaved off after the global economy went into turmoil owing to the COVID-19-induced lockdowns.
"Today's decision is in line with stance of withdrawal of accommodation stated in last meeting," said Das.
"Last two years is a saga of determined fight on daunting challenges from pandemic and now the war," he added.
The standing deposit facility (SDF) stands adjusted to 4.15 percent and marginal standing facility (MSF) to 4.65 percent.
Most of
the rate-sensitive stocks -- or stocks from spaces sensitive to changes in interest rates -- were in the red after the announcements.
First Published: May 4, 2022 2:59 PM IST
