Mr. P Jayaram Bhat, Managing Director of Karnataka Bank said that the cash reserve ratio (CRR) was expected to be lowered by 25 basis points.
After the Reserve Bank of India released the second quarter review of the monetary policy of 2012-2013, Mr. Bhat said keeping in mind the higher inflation projection and the current scenario of the fiscal, RBI had to lower down the CRR.
Mr. Bhat further said that the reduction in the CRR will however improve liquidity and it will also lead to a reduction in most of the important rates on future deposits. It will also impact on the lending rates.
Mr. Baht commenting on the move to increase the provision for restructured standard accounts from 2 per cent to 2.75 per cent, he said that this will be the first step of the implementation of the study report which was published by the RBI recently.
The CRR cut will impact in the banks profitability but it will highly depend on the individual bank's maximum restructured assets.