Wednesday, April 30, 2008

Money Matters - Ofcourse, In hand

YVR has increased the CRR to 8.25 from 8%. CRR is the Cash Reserve Ratio that every bank has to maintain with the Reserve Bank of India. I thought that this is a much needed increase as every bank gives loan without doing credit check or the repaying capacity of the individual or the company. In such bad state of affairs in loan lending, it is wise decision to improve the strength of your liquidity. On the parallel, Infosys leads among all Software exporter companies in maintaining huge Cash in Hand. Even in our traditional grand mother way of budgeting for the family, we had the practise of having a reserve cash in the kitty.

Why worry about the increase in CRR by 25bps ? Afterall, it is going to be useful on a rainy day.

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