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Bank rate up to 11%, CRR 10.5%
The Reserve Bank of India has tightened money by pushing up the bank rate by 2% and increasing banks' cash reserve ratio (CRR) by 0.5% to 10.5%. The package of measures, which is intended to bolster a flagging rupee, is also expected to push up interest rates all over. While the CRR hike will bottle up Rs 2,500 crore of bank funds at one go, the RBI has also decided to close all boltholes for cheaper funds by raising the fixed interest repo rate to 9%.
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Hike in cash reserve ratio will siphon off Rs 2,500 crore
The Reserve Bank of India's decision to hike the cash-reserve ratio (CRR) by 50 basis points to 10.50% will suck out Rs 2,500 crore from the system.
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Refinance limit pruned to 0.25 per cent
The Reserve Bank of India has announced a cut in the general refinance limit for banks from 1% to 0.25% of fortnightly average outstanding aggregate deposits in 1996-97. The interest rate on the facility also went up by 2% as it was pegged to the bank rate.
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Cotton-yarn exports increase five-fold
The Centre's pragmatic approach with regard to exports of cotton yarn by prescribing quantitative ceilings on a year-to-year basis seems to have paid off. India has emerged as the largest exporter of cotton yarn, earning $1,501.50 million (Rs 5,330 crore) in 1996-97. These exports have in fact increased five-fold in rupee terms from Rs.989.02 crore in 1991 to Rs 5,330.17 crore in 1996-97.
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