Bankers demand CRR cut or interest on it from RBI

Posted By: PTI
Subscribe to Oneindia News
Mumbai, July 11: In run-up to the first quarter monetary policy announcement by RBI on July 30, bankers today strongly pitched for a reduction in the cash reserve ratio (CRR) as they feel a cut in the short-term lending rate looks unlikely given the rupee volatility.

"We have requested the central bank to cut CRR as we don't think a repo rate cut is possible given the shape of the rupee. We have also told them if the CRR cannot be reduced at least we should be paid interest on our deposits with the RBI, as that can also enable us to bring down our lending rate," Punjab National Bank Chairman K R Kamath told reporters at the RBI headquarters here.

Kamath, also Chairman of Indian Banks Association, was talking to the media after the customary pre-policy meeting with the RBI brass.

RBI Governor D Subbarao was not present in the meet as he was in Indore. State Bank of India Managing Director and Chief Financial Officer Diwakar Gupta said bankers also discussed the muted credit and deposit growth as well as the rising bad loans in the system.

"We also discussed the impact of the rupee fall on the asset quality of banks," said Gupta, who is retiring from the bank by July-end. The bankers demanded the RBI reduce the tenure of FCNR /NRE deposits in the light of depleting forex reserves and the flight of capital due to FII selling in the debt and equities. Such a reduction can help stem the volatility in the rupee as it will possibly increase the remittance inflows, said Bank of Baroda Chairman and Managing Director SS Mundra.

"We have sought a relaxation in the provisioning norms for restructured assets in the light of the stress in the economy due to the weakening of the rupee," he said.

The rupee has depreciated by over 12 per cent against the dollar since the beginning of FY14. It has slid heavily since May 20 after announcement by the US Federal Reserve that it might pull back its liquidity-infusing bond repurchases as domestic employment situation and the economy has improved.

The rupee hit a lifetime low of 61.21 to the dollar on Wednesday, forcing the RBI and capital markets regulator Sebi to take steps to arrest the slide.


Please Wait while comments are loading...