Hike in CRR highly detrimental to Industry: IDBI

Mumbai, Jun 14: A further hike in Cash Reserve Ratios (CRR) can inflict a bigger impact up on the banking Industry, said IDBI Chairman V P Shetty to UNI after launching IDBI Gilts Ltd, a wholly owned Primary Dealer (PD) subsidiary here today.

''Reserve Bank has other instruments also to suck out liquidity from market apart from mooting another CRR hike. If it happens, that would definitely inflict adverse impact up on industry.'', he said.

IDBI Gilts, which would be headed by present IDBI General Manager N S Venkatesh, will focus on Government securities, equity tradings and mutual funds. IDBI has pumped in Rs 100 crore for the new subsidiary.

As per the slated plans, IDBI would come out with a full spectrum of financial services by the end of 2008, said Mr Shetty.

''Given the recent RBI regulations, IDBI Gilts will have a greater role in expanding the core and non-core activities of business. The new company will reach the pre-eminent position in government security market by 2008'', said Mr Shetty.

The bank has plans to span operations to all segments in the financial service space including banking, insurance, asset management and private equity and will also focus on bond trading, underwriting in auctions of government securities and treasury bills.

The bank has projected growth of 22-25 per cent in the coming year , whereas a target of 67 per cent growth has been set for deposits and 18 per cent in advances. IDBI's total deposits touched Rs 43,000 crore. The prime lending rate (PLR) is 13.25 per cent. The NPA for FY07 stood at 1.12.

IDBI Capital Market Services Ltd (ICMS) will continue to be a significant player in equities, he added.

UNI