business news|RBI raises CRR by 75 basis pts

The Reserve Bank of India on Friday in its third quarter review of monetary policy 2009-10 increased mandatory cash reserve of banks held by it by 75 basis points.

The 75-bps increase in the cash reserve ratio (CRR) to 5.75% will be implemented in two steps, starting February 13, to suck Rs 36,000 crore from banks. Although the central bank has left its key repurchase rate untouched at a record low of 4.75% and the reverse repo rate at 3.25%, it has promised to respond 'swiftly & effectively' to temper inflationary expectations.