State Bank of India is expecting that in the monetary policy review, the apex bank might cut interest rates by 0.5 per cent and to boost growth the CRR might be raised by one per cent.
Mr. Pratip Chaudhuri, Chairman of State Bank of India said, "CRR cut is more important and repo rate cut if it happens will be very useful. 50 basis points repo rate cut would be useful. CRR, I would request for a 50-100 basis points cut".
"Only then, the rate of interest environment can come down significantly," Mr. Chaudhuri added.
The Reserve Bank of India is scheduled to announce its third quarter monetary policy review on January 29th and it hinted that it cut interest rates in the review. Mr. Chaudhuri also said that RBI should allow banks to give two per cent interest on current accounts deposits.
Reserve Bank should allow some interest...something like two per cent to be paid on current accounts... that will encourage more people to put (money in banks) instead of keeping the money in cash. It (interest rate) will help put the money in current account," Mr. Chaudhuri said.
Presently, banks do not pay any interest on money kept in current account.