The Reserve Bank on Wednesday announced a hike in cash reserve ratio (CRR) by 50 basis points to 4.5 per cent, effective May 21, which will take out Rs 87,000 crore liquidity from the system.
The decision was announced by RBI Governor Shaktikanta Das after an off-cycle meeting of the rate-setting panel — Monetary Policy Committee (MPC).
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CRR is a percentage of a bank’s total deposits that it needs to maintain as liquid cash. The MPC also decided to raise the repo rate or the short-term lending rate by 40 basis points to 4.4 per cent.
