The Reserve Bank of India (RBI) imposed a temporary cash reserve ratio (CRR) over the weekend, on the incremental rise in bank deposits following the government?s demonetisation move. The measure, which will be reviewed on December 9 and was largely expected by analysts, aims to suck out excess liquidity in the system; though banks will not be able to earn any income on these deposits.
Banks can’t cut lending rates as much as expected
Given this development and the ongoing clampdown on black money via the demonetisation route, will the RBI cut interest rates in its upcoming monetary policy review tomorrow? Here is what top research houses and brokerages expect.