SBI favours CRR cut at RBI policy review
Wed, 04 Apr 2012 23:19:07 -0600
CRR cut can lead to moderation in lending rates
State Bank of India expects the Reserve Bank to further unlock liquidity by reducing cash reserve ratio (CRR) by 0.75 per cent later in the month, that
could lead to moderation in lending rates.
"My personal stance is that cut CRR. Everything else follows. Lending rate will come down eventually. I would expect 75 basis point cut in CRR," SBI Chairman Pratip Chaudhuri said after the pre-monetary policy consultation of Indian Banks' Association (IBA) with the Reserve Bank.
Last month, RBI slashed CRR (cash reserve ratio), the percentage of deposits that banks have to keep with the RBI, from 5.5 per cent to 4.75 per cent. With this, the central bank had infused Rs 48,000 crore into the economy.
The apex bank is eliciting view of stakeholders to formulate the annual monetary policy which is scheduled to announced on April 17.
The meeting, chaired by Reserve Bank Governor D Subbarao, was attended by IBA Chairman MD Mallya and Chairman and chief executives of public and private sector banks here today. RBI yesterday met the representatives of industry chambers.
Asked if the bank would cut lending rates, Chaudhuri said "If there is CRR cut then certainly. Not the base rate but we will look more at cutting spreads for the segment which are paying 13 per cent plus."
Auto loans are already at 11.75 per cent but rates which are at 14-15 per cent range need to be brought down, he added. "We are on the verge of reducing rates for SMEs. If that happens some lending rates will be reduced by 1-2 per cent so as we get a greater sense and certainty about liquidity we will cut the rates in all likelihood by April," he said.
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