ICICIDirect - RBI policy update

In a surprise move, the RBI on Friday hiked the short term interest rate
(repo rate) and cash reserve ratio (CRR). It raised the repo rate by 25
basis points to 7.75%. The central bank also raised the CRR by half a
percentage point. The CRR will rise to 6.50% in two tranches, the first on
April 14 and the other on April 28. The CRR hike will drain Rs 15,500 crore
from the banking system. Though the move may impact banks in the short-term,
we believe it would help economic growth over a longer term.

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