Saturday, October 11, 2008

Impact of decrease in CRR Ratio

I heard the news that RBI is decreasing the cash reserve ration by 150 pt. basis to increase the liquidity in the market. It will bring Rs. 60,000 crores into the Indian market. Initially I thot y RBI has taken this step as it'll again increase the rate of inflation which was afterall under control after so much efforts.. but i had a talk with vinay sir ..then i realised that this monetory measure will not have any effect on the rate of inflation as the cause of inflation were something else i.e. the crude oil price and the scarcity of commodity in the market which are under control now( crude oil fell below $83 / barrel ...AMAZING !!), but the present crisis is due to the negligible assets into the market all over the globe. Hmmmm... after all RBI ppl are not fools..silly me..

Read an article which said that FDIs too can draw back their money simply  by selling off their assets..dint get it as it went against my conventional notion of FDI investment ..then what difference remains between the FDIs and the FIIs. Can anyone help me out??
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