RBI cut CRR to 8.5%, last Cut In June 2003

• The Reserve Bank of India (RBI) cut the cash reserve ratio (CRR) by half a per cent or 50 basis points from 9% to 8.5%, thus providing a breather to lenders
• Cash reserve ratio (CRR) is the slice of deposits that banks have to mandatorily park with the central bank. It is like a tax for the banks since this money does not generate any returns
Look at this graphic for recent trends in CRR.
• This measure was to ease the unprecedented liquidity crunch faced by banks and also to boost capital in flows
• This move will release Rs 20,000 crore into the system, a small relief for banks, who reckon the move could positively impact short-term rates, but not lead to any changes in lending rates
This graphic very well consolidates the matter for you

Global Markets spiral downwards

• The big fear in the markets across the world is a recession in the US, Europe and may be Japan, and more write-downs by big global banks. Amid concerns that companies will be forced to cut production and prune jobs, stocks dipped across markets
• When the US market opened on Monday, Dow slipped below 10,000 for the first time since October 2004. The index plunged further and was trading 737 points down
• During the day, European stock markets tanked 7%, while among the emerging markets Russia suffered the most, falling 19%, followed by Brazil and China, which fell 15% and 5%, respectively
• Drop in oil to below $90 a barrel and falling commodity prices have also deepened fears of deflation
India suffered a major sell-off, which was also attributed to fresh margin calls by brokers as the Sensex dropped 724 points (5.8%) to close below 12,000. The benchmark index ended the day at 11,802, a 25-month low
• The NSE 50-share Nifty slipped 216 points (or 5.7%) to end at one-and-a-half-year low. Foreign institutional investors (FIIs) pulled out as much as Rs 1,169 crore
This graphic illustrates the carnage on the streets

Rupee hits 5-½ year low against the US Dollar

• The rupee slid to its lowest in more than five and a half years on Monday as local shares dived nearly 6%, triggering fears of an accelerated outflow of foreign funds, while dollar demand from importers and oil firms weighed
• The dollar is stronger overseas. Importers and oil firms were buying dollars and there are no dollar inflows
Look at this graphic

Nano may drive to Gujarat

• GUJARAT is emerging as the favourite location to replace Singur for the setting up of the mother plant for Tata Motors’ Nano
• Industry-friendly Gujarat is likely to bag the coveted project although there is a stiff competition from Andhra Pradesh and Karnataka
• Ratan Tata may walk his famous talk — “You are stupid if you are not in Gujarat” — made during the second Vibrant Gujarat Investors’ Summit in 2007
• Gujarat has readied at least four sites for the Tatas to choose from. Speculation was rife that the Nano would eventually be rolled out from Sanand, 30 km away from Ahmedabad
• If the Nano happens to land in Gujarat, it will be a shot in the arm for Mr Modi, who completes seven years in office on October 7

20 terror suspects arrested

• In what has been touted as the ‘biggest manhunt’ in India, the Mumbai police on Monday claimed to have nabbed key members of the terror module allegedly responsible for the bomb blasts in Ahmedabad and Hyderabad and for planting bombs in the diamond city of Surat
• The police commissioner Hasan Gafoor and crime branch chief Rakesh Maria, who were flanked by a team of more than 30 crime branch officials involved in the operation, revealed that three of these suspects were directly involved in sending terror emails that had shocked the country in the last month
• According to police, these are all highly qualified, computer savvy people belonging to good and educated families. Their families were not aware of their activities
• One of the suspects, Mohammed Mansoor Asgar Peerbhoy (31), a resident of Pune, was employed with Yahoo as a principal software engineer. His annual pay package is Rs 19 lakh
• Why does somebody so well educated and having a great career, get involved in such dastardly acts is a great mystery for me

Centre rushes more troops as violence in Assam causes 40 casualties

• As ethnic violence between Bodos and Muslim immigrants spread to newer areas of northern Assam and the death toll touched 40, shoot-at-sight orders were issued in the riot-ravaged Udalgiri and Darrang districts on Monday and more police forces deployed in neighbouring Chirang
• Fifteen people have died in police firing alone and nearly 200 villages singed by communal flames. More than one lakh people, from both the Bodo and Muslim communities, have been forced to flee their villages
• With the ethnic violence spreading to newer areas, the Centre on Monday despatched 1,400 para-military force personnel to the strife-torn state