RBI should cut CRR by 50 bps to ease liquidity pressure: Bankers
By Vaibhav Aggarwal
Apr 5, 2013
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Bankers put pressure on the Reserve Bank of India to cut the cash reserve ratio (CRR) by 50 basis points in its annual policy to ease the liquidity pressure, says bankers.

In a pre-policy consultation meeting with the RBI, bankers represented that keeping in mind the tight liquidity situation, RBI should cut the CRR.

Currently, the cash reserve ratio is at 4 per cent of deposits. A reduction in CRR will release liquidity and help banks cut its lending rates.

The RBI is scheduled to announce its Annual Policy on May 3. In the run-up to the Policy, the RBI is holding consultations with various stakeholders.

Mr. S. S. Mundra, Chairman and Managing Director of Bank of Baroda, said, "We have asked for a 50 basis points CRR cut. The deposit growth has been slightly lower than the RBI's projection (of 15 per cent growth in FY13). Though liquidity was tight till now, it should improve."

Besides the CRR cut, bankers also want the repo rate cut. However, looking at the present liquidity situation there was more emphasis on CRR cut, Mr. Mundra said after the meeting.


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