Bankers expect cut in key policy ratio CRR by 1%: Top Bank Officeal
December, 10th 2010
With credit demand picking up and liquidity crunch yet to ease, bankers are expecting a cut in key policy ratio - Cash Reserve Ratio (CRR) - by one per cent in the mid-term monetary policy review by RBI, a top bank official said.
"Bankers won't be surprised if RBI announces a cut in CRR rate by one per cent in its mid-term monetary policy review," a top Punjab and Sindh bank official told PTI today on condition of anonymity.
The mid-term monetary policy review by RBI is due on December 16. Lowering of CRR, the amount of funds banks have to keep with RBI, by one per cent is projected to infuse Rs 50,000 to 60,000 crore into the system.
"Currently liquidity position is very tight in the system. With advance tax payouts lined up it will tighten up further. Unless government begins to loosen its purse strings the crunch will not ease off," he said.
The government has got Parliament nod for spending around Rs 20,000 crore over the budget estimates, which together with earlier approval will take the total extra expenditure to over Rs 74,000 crore, a bank official said.
"The way things are moving liquidity of Rs 50,000 to 60,000 crore will tide over for the period till government begins its spending," he said.
"The government spending has not taken place so far, and has been delayed somewhat this fiscal," he said.
"CRR at 6 per cent has largely remained unchanged so far this year," a bank official said.