The Chairman of ICICI Bank, K. V. Kamath, said on Thursday that Cash Reserve Ratio (CRR) was only one of the monetary policy tools available to the central bank. Refusing to be drawn into making a comment on the recent statement by the State Bank of India Chief, Pratip Chaudhuri, that the CRR, which requires banks to keep a portion of their deposits with the Reserve Bank of India, be abolished, he said, “The Cash Reserve Ratio is only one of the monetary policy tools available. “India has always had a CRR as long as I can remember,” Mr. Kamath said. Mr. Kamath was speaking to reporters on the sidelines of an event organised by the Confederation of Indian Industry.
Referring to the crisis in the eurozone, Mr. Kamath said with the crisis spreading from Greece to Spain and some other countries, “the situation has become very fluid.”
“Historically, the key drivers of the Indian economy have been investment and consumption, with exports playing the role of a secondary driver,” Mr. Kamath said. The situation was the same now, although exports had increased, he argued. With the global economy slowing down, with Europe facing challenges, and even China experiencing a slowdown, the environment for exports was difficult, he said. “If exports are going to slow down, we have to think of calibrating our imports,” he contended.
“I believe government spending on infrastructure and productive purposes will continue and will be supplemented by private expenditure,” said Mr. Kamath. “Compared to about a decade ago, the “size of the NPAs (non-performing assets), which includes restructured assets, is much smaller now,” he said.
