PNB Executive Director criticises RBI on repo rate

Ranchi, Jul 26 (UNI) A top Banker today criticised the RBI for enhancing the repo and reverse repo rate, saying it would compound the problems of Banks, which were already struggling to project a consumer-friendly image in the wake of continuous hardening of interest rates.

The Reserve ank of India's decision had been under fire from various financial institutions for they apprehended that it would certainly come in the way of their relentless efforts to provide ''consumer-friendly'' service.

The Banks, already under pressure from various angles, will again be greatly affected by the RBI decision, Punjab National Bank Executive Director K Raghuraman told UNI here today saying in the past two years the interest rates also went up by three per cent.

Adding to Banks' plight, Mr Raghuraman said the interest rate on Cash Reserve Rate (CRR) had also been waived.

In the wake of such situation the enhancement of repo rate by 0.25 per cent was not desirable, the PNB Executive Director said.

The RBI cited liquidity to justify the hike, he said and countered the same, saying from August the business activities naturally went up which would automatically solve the problem.

It seemed that the RBI was compelling to invest more in government securities whether the Banks were left with money to spend in other sectors or not.

In this context the Banks would be left with no option but increase the interest rates leading to pulic inconvenience, he said.

The car and home loan's intrerest would also certainly soar, Mr Raghuraman said and indicated that the PNB might increase the interst rate by half per cent.

The assest liability committee of the Bank will sit soon to take a decision on the subject, he said.

Mr Raghuman was here on a two-day tour to make an assessment of the PNB's performance in the state.

UNI PRS SJC KLC1341