RBI hiked the cash reserve ratio for banks by 50 basis points to 7%. But it failed to affect the Stock market bull momentum. When the news came on the television screen stock market fell down by almost 1% but after ½ hour it bounced back and went up by 2%. Here RBI wanted to drain access money from the banking system to control inflation between 4% to 4.5% . But due to Positive global cues, enthusing quarterly numbers and a strong bullish sentiment , it didn’t affect the market momentum.
The CRR revision will come into effect from Aug 4.
CRR: The percent of depositors' balances banks must have on hand as cash. This is a requirement determined by the country's central bank, which in the India is RBI. The reserve ratio affects the money supply in a country.
For example, if the CRR in the India is determined by the RBI to be 7%, this means all banks must have 7% of their depositors' money on reserve in the bank. So, if a bank has deposits of $1 billion, it is required to have $70 million on reserve.
The CRR revision will come into effect from Aug 4.
CRR: The percent of depositors' balances banks must have on hand as cash. This is a requirement determined by the country's central bank, which in the India is RBI. The reserve ratio affects the money supply in a country.
For example, if the CRR in the India is determined by the RBI to be 7%, this means all banks must have 7% of their depositors' money on reserve in the bank. So, if a bank has deposits of $1 billion, it is required to have $70 million on reserve.
1 comment:
very good. good information passed in simple language to general users and investors
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