Mumbai, January 29: The Reserve Bank today said its asking the lenders to park more cash with itself would not harden interest rates immediately or impact the credit flow to the private sector.
In its quarterly monetary policy review today, RBI hiked the cash reserve ratio (CRR)– the amount banks have to park with the central bank– by 0.75 per cent to 5.75 per cent.
“(Despite the CRR hike), there will be sufficient liquidity in the system to meet the potential demand from the private sector,” RBI Governor Subbarao told reporters here today.
RBI has left the short-term lending and borrowing rates unchanged at 3.25 per cent and 4.75 per cent respectively.
Subbarao, who met bank chiefs earlier in the day to discuss the policy measures, said banks have informed him that the hike in CRR would not put an immediate pressure on them to up the lending rates.
–Agencies