NEW DELHi:The Reserve Bank is likely to raise Cash Reserve Ratio (CRR), the portion of funds that banks have to keep with the regulator, by 50 basis points in its forthcoming monetary review next week and signal tight monetary measures, says Moody's.

"...at its October policy meeting, the central bank will signal to markets that it has adopted a tightening bias by raising the cash reserve ratio (CRR) by 50 basis points," Moody's economy.com, the research arm of Moody's said ahead of the RBI's monetary policy review on October 27.

Higher CRR, Moody's said, would help in removing excess liquidity that has built up in the banking system from strong capital inflows and deposit growth that has outpaced lending.

Reserve Bank had gradually reduced CRR from 9% to 5% unlocking banking sector funds to minimise the impact of the global financial meltdown on the Indian economy.

RBI, however, may not revise the policy rates like the short-term lending (repo) and short-term borrowing (reverse-repo) rates as the economic recovery is in early stage, Moody's added.

At present, the repo rate (the rate at which banks borrow from RBI) is at 4.75 % and reverse repo (the rate at which RBI borrows money from banks) stands at 3.25%.

Moody's further said that inflation concerns do not mandate monetary tightening at present.