If we are growing at 9% where is all the money going....
2007-02-15 05:01:58 · 4 answers · asked by lknaidu n 1 in Social Science ➔ Economics
Crr rate is hiked due to liquidity crunch. In every growing economy people tend to spend more, be it real estate investments, consumer goods. All these add to the credit offtake due to easy availibility of loans. As a result crunch.The watch dog RBI has taken the right step in doing so, it may help contain the loans offtake.The money is very much there but only borrowing gets expensive.Its time to open our eyes otherwise harsh realities are not far away...Stock market crash followed by real estate crash and so on.
2007-02-17 06:00:14 · answer #1 · answered by bhupesh 2 · 0⤊ 0⤋
The RBI is increasing the crr because the lending to deposit ratio of the banks are decreasing meaning that banks are lending more that they have reserves for it.
By increasing the crr by 50 basic points banks will have money of about Rs 13500 cr which will be available for loan disbursement.
Also when the economy is in a buoyant stage it is good to have some capital formation and increase the savings rate.
2007-02-15 13:12:34 · answer #2 · answered by aquarianabhi 2 · 0⤊ 1⤋
Cash Reserve Ratio... to Bank: When the CRR is increased the money circulation will be controlled: when money circulation is controlled the inflation will decrease: This is the formula
2007-02-15 13:11:48 · answer #3 · answered by ar.samy 6 · 0⤊ 0⤋
to control infaltion, which is at 6.73%!!!
2007-02-16 04:48:21 · answer #4 · answered by sushobhan 6 · 0⤊ 0⤋