RBI: Cash crunch in banking system for the first time in 40 months! RBI had to take this step

Today english news:

Indian Banking System: For the first time in 40 months, there has been a shortage of cash in the Indian banking system after the tough policy decisions taken by the RBI to curb inflation. After this situation, RBI has to put $2.73 billion i.e. Rs 21800 crore in the banking system on Tuesday, September 20, 2022. This is the first time since May 2019 that there has been a cash crunch in the banking system.

In fact, on May 4, 2022, the RBI had decided to increase the Cash Reserve Ratio in the Monetary Policy meeting to rein in inflation. In order to reduce the excess cash present in the banking system, RBI increased the cash reserve ratio (CRR) by 50 basis points from 4 per cent to 4.50 per cent. The decision to increase CRR came into effect from May 21, 2022. This led to a reduction in the additional cash of Rs 90,000 crore present in the banking system.

In fact, inflation is increasing continuously. The major reason for this is believed to be the excess cash available in the market. This is the reason why the RBI had decided to increase the CRR by 50 basis points in order to absorb the existing excess cash with the banks. Banks have to keep 4.50 percent of the total deposits with the RBI as CRR. This has reduced the existing excess cash in the banking system. Banks are now providing loans thoughtfully. Let us tell you that RBI does not even pay interest to banks on the CRR that banks have to keep with RBI.

After the cash crunch in the banking system, the call money rates for one day have risen to 5.85 per cent, which is the highest since July 2019.

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, RBI: Cash crunch in banking system for the first time in 40 months! RBI had to take this step
, , 2022-09-21 13:03:16

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