Reacting to Tuesday’s Reserve Bank of India’s policy announcement, Devendra Kumar Pant, Director, Fitch Ratings India Pvt. Ltd., said that in the absence of significant fiscal consolidation, headroom available for monetary policy action was limited. “Monetary policy in isolation cannot address all the issues the Indian economy is facing.”
According to Anis Chakravarty, Senior Director, Deloitte in India , “with inflationary pressures remaining untamed, at the moment, there is not much room left for RBI to take any further actions for monetary easing. The government needs to resort to other measures, including structural improvements, fiscal consolidation and improving business environment to stimulate growth in the near future.”
Deepak Jalan, President of the Merchants Chamber of Commerce, said that a cut in CRR and Repo rates could certainly enable banks to augment liquidity in the market.
Keywords: RBI monetary policy review, D. Subbarao, interest rates, growth projection, Statutory Liquidity Ratio, repo rate, reverse repo rate, Cash Reserve Ratio
Does SLR drop please banks as much as a CRR cut to make them increase
liquidity in the system? SLRs are met through purchase and possession of
gov. bonds (G-Secs), and in many cases, banks hold them in excess of the
'statutory minimum'. That's because bonds, even though yielding little
are safer than general lending. Instead of this 'release' of Rs. 60,000
crore, what may be of interest is information about the magnitude of
investment already under the SLR head. What's that magnitude?
In the face of inflation the Reserve Bank did not have many options. The RBI reducing
SLR infusing greater liquidation is good. The exporters have been paid good
attention. When inflation is likely to go up and the estimated GDP is going down, it is
good that left the interest rates untouched.
Thank you governor, understanding poor and middle class of this country, rate cut just helps industry, not poor citizens, because in any case they won't get credit, and rate cut will be inflationary.
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