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The upping of the daily Cash Reserve Ratio (CRR) maintenance requirement from 90 per cent to 99 per cent within the CRR norm of 3 per cent of deposits, could lead to a small dilution in banks’ net interest margins (NIMs), which they may be able to pass to borrowers, according to Jefferies

“In line with the change in MPC stance to ‘calibrated tightening’, RBI raised daily CRR from 90 per cent to 99 per cent.

“At 100 per cent CRR, banks would carry ₹8 lakh crore in CRR, and if this lifts balances by 5-10 per cent, it can withdraw ₹40,000-80,000 crore of liquidity & add 1-2 basis points to cost of funds,” said Jefferies India equity analysts Prakhar Sharma and Vinayak Agarwal.

Jefferies India Pvt Ltd is licensed by the Securities and Exchange Board of India as a stock broker, research analyst and merchant banker.

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