Increase CRR drains huge funds from banks: BNCCI

Kolkata,Mar 31: RBI's decision to raise the cash reserve ratio(CRR)in public sectos banks by 50 basis points and the repo rate by 25 per cent with immediate effect, would drain out Rs 15,500 crore from the banking system,feels Bengal National Chamber of Commerce and Industry (BNCCI).

Expressing strong reservations towards RBI's move, BNCCI President Shanta Ghosh in a statement here today said on two similar previous occasions Rs 27,500 crores had also been drained out.

She said although the continuous upward adjustments of CRR would help in containing inflation, this would be at the cost of Industry, business and commerce, as they would have access to less and less credit.

The rising cost for credit should also be tackled with caution as spiralling costs would make the industries on-competitive, both locally and globally, she said and felt the urgent need to control the inflation keeping the growth spurt in mind.

The situation could also be handled by bringing cost controlling measures, including controlling the price of petrol, diesel and other fuel,she added.

UNI