Given the sluggish growth in the economy, most of the leading banks in the country have urged the monetary regulator, Reserve Bank of India, to slash key policy rates, like cash reserve ratio and repo rate, in the forthcoming monetary policy review, which is scheduled to be declared on January 29, 2013.
Reportedly, the last time RBI reduced rates was in April when it cut rates by 50 basis points (bps). Later, it also decreased cash reserve ratio by the same amount (50 bps) in two phases.
On the matter, the Managing Director of HDFC Bank, Mr. Aditya Puri said that banks feel that even though inflationary concerns remain constant, tackling economic growth is a bigger issue. Banks do understand the concerns over inflation, but they recommend the central bank to slash rates like CRR.
It should be noted that before announcing every monetary policy, RBI holds a meeting with the various stakeholders to know their viewpoint on upcoming policy. In the previous monetary policy review, RBI had hinted that it may reduce rates in the January - March quarter of 2013.
Reportedly, RBI is resisting any rate cut due to high inflationary conditions in the economy.