Bankers view no reason for hike in CRR

Category: International Trade Sub-category: Credit Rating
Document type: news

Retail and corporate borrowers received a relived breath as the bankers shows no immediate hike in lending rates is unlikely even as the RBI tightened money supply by raising the CRR by 75 basis points.

Cash reserve ratio (CRR) is the amount of bank deposits kept with the Reserve Bank of India.

"There may not be an immediate hike in the lending rates as liquidity at the moment is sufficient. We need to see how the liquidity conditions pan out. Going forward, as the credit off take picks up, there may be an increase in rates," SBI Chief Financial Officer S S Ranjan said.

"I doubt if there would be a hike in interest rates immediately as there is enough liquidity in the system," IDBI Bank Executive Director Sushil Munhot said.

RBI raised CRR by 75 basis points to 5.75% in its third quarter monetary policy review,to suck out Rs 36,000 crore from the system.but the apex bank retained short-term lending and borrowing rates at 4.75% and 3.25% respectively.

The move by RBI is to anchor inflationary expectations, Munhot declared.

According to Corporation Bank Executive Director Asit Pal, "there would not be any change in prime lending rate as there is sufficient liquidity in the system and credit offtake is also muted at this point of time."

"However, there could be some spike in inter-bank call rate," Pal added.

Yes Bank Managing Director Rana Kapoor said "CRR hike would not disturb the present interest rate regime."

Source: Financial Express