The Reserve Bank of India’s CRR cut by 25 basis points has sent the banking stocks on a rally both on the Bombay Stock Exchange and the National Stock Exchange.
Cash Reserve Ratio is the percentage of deposits kept by banks with the RBI as cash. A basis point is equal to one percentage point.
The repo rate will continue to be at 8 per cent while the CRR will be at 4.5 per cent. As a consequence of this move, about Rs 17,000 crore of liquidity will be injected into the banking system.
Bank Nifty (NSE) jumped 2.23 per cent compared to less than one per cent gain in benchmark Nifty in the morning trade, while the BSE Bankex soared 2.33 per cent.
At noon, the shares of ICICI Bank, Canara Bank and Union Bank of India were trading above 4 per cent, while State Bank of India, Bank of Baroda and YES Bank were up over 3.5 per cent on both the exchanges.
Moreover, Punjab National Bank, Axis Bank, IndusInd Bank and Bank of India shares were trading over 2 per cent each on the BSE.