Bankers on Thursday said the status quo in the monetary stance of the Reserve Bank is largely on expected lines taken after considering the tight liquidity situation and cooling inflation numbers.
“The RBI has taken a balanced view by keeping monetary measures unchanged. With inflation showing signs of abatement, easing of liquidity measures will support economic growth,” foreign lender Citi’s Chief Financial Officer, Abhijit Sen, told PTI.
In its mid-term policy announcement, the RBI today kept its key rates (repo and reverse repo) unchanged while the cash reserve ratio (CRR) -- the amount of cash banks have to keep with the central bank was also left unchanged.
The repo presently stands at 6.25 per cent and the reverse repo at 5.25 per cent. The CRR also remains unchanged at 6 per cent.
Rather, the central bank opted for making use of other instruments like lowering of SLR by one per cent to 24 per cent of their net demand and time liabilities and conduct open market operation (OMO) auctions for purchase of government securities which is slated to infuse another Rs 48,000-crore in the system.
Private sector lender HDFC Bank’s head of treasury operations, Ashish Parthasarthy, said though the SLR had already been taken down by two per cent as a special measure earlier, banks were not comfortable using the window. But now, the measure is more “palatable” for banks as it can be done automatically.
“Theoretically, no additional liquidity is being infused, but practically, I am sure there will be an increase,” he said.
Public sector Corporation Bank’s Chairman and Managing Director, Ramnath Pradeep, also said that the move was on expected lines, though he would have liked a cut in the CRR as well to infuse more liquidity.
Pradeep said he does not expect any more rate hikes by the RBI till March.
Corporation Bank’s asset liability committee will be meeting before December 25 to take a call on its base rate, which is one of the lowest in the industry, he said.
“We were waiting for the RBI’s policy direction. Now that it is clear we may increase the base rate,” he said.
