IndiaSphere

Challenged by unrelenting inflationary pressures, Reserve Bank on Tuesday announced stringent measures of hiking mandatory cash reserve of the banks and its short-term lending rate to them to suck up an estimated Rs 20,000 crore (Rs 200 billion) — a move that could make loans dearer for housing, car and personal expenses as also to the industry.Announcement of hiking cash reserve ratio by 50 basis points and the short-term lending (repo) rate by a similar margin comes close on the heels of RBI Governor Y V Reddy discussing with Prime Minister Manmohan Singh and Finance Minister P Chidambaram the prevailing inflation scenario.Reflecting the Finance Ministry’s view that monetary policy would be the first line of defence against inflation that has surged to a 13-year high of 11.05 per cent, the RBI after intense consultation today pronounced the new ... [Follow Original Article link for full content.]