Leading private sector banks in the country are urging the banking regulator, Reserve Bank of India, to introduce rate cuts in key policy rates for the upcoming monetary policy review. Mr. Aditya Puri, the Managing Director of HDFC bank, and Ms. Shikha Sharma, the Managing Director of Axis Bank, are of the view that reduction in key rates will induce economic growth, which is currently below 5 percent.
On the matter, Puri said, "RBI could give a signal because you don't want growth to come below 5 per cent." He further added, "Yes, inflation has been high, but on that inflation, about 30 basis points is (due to) the fuel price increase, so (the actual number) is about 7.5 per cent. I am hoping for the best."
Likewise, Sharma of Axis Bank is of the view that after introducing important fiscal policy reforms, it is the time for RBI to move its focus towards growth. She said, "While monetary policy needs to focus both on inflation and growth, given the recent fiscal measures, which are hopefully going take us towards a better situation on fiscal consolidation, I think the leaning of policy right now needs to be on growth." She also added, "We just can't afford to have growth being stopped below 5 per cent. Therefore, I would see CRR cut by 50 basis points."
It is to be noted that the monetary policy review for the second quarter is due to be unveiled on October 30, 2012.