SECTOR UPDATE:: Banking

Banking

CRR hike to hurt sentiments
The Reserve Bank of India (RBI) has raised the cash reserve ratio (CRR) by 50 basis points to 8% to check inflationary expectations by sucking out excess liquidity from the system. The hike would be implemented in two stages: a 25-basis point hike on April 26, 2008 followed by a 25-basis point rise on May 10, 2008. The fact that the RBI has not waited for the policy review (due on April 29, 2008) for announcing the CRR hike is likely to weigh down heavily on sentiments towards the banking stocks.