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Updated: January 10, 2013 22:53 IST

SBI chief bats for rate cut

Special Correspondent
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Pratip Chaudhuri
Pratip Chaudhuri

State Bank Group chairman Pratip Chaudhuri has argued for a 50-100 basis point reduction in cash reserve ratio (CRR) and a 50 basis-point cut in repo rates, saying that these would do enormous good to the economy, at a time when credit absorption was flagging due to high interest rates.

During an interaction with the media here on Thursday, he said the State Bank of India (SBI) would promptly pass on to its customers the benefit of any cut in CRR that the Reserve Bank of India might permit after its upcoming review of monetary policy.

He said that inflation to some extent was inevitable because of fuel price increases. The country could also look at whether it was required to maintain, as buffer stock, such a large quantity of food as was being held as stock at present. Part of it could be released for distribution within the country and even exported.

Replying to a question, he said Kingfisher Airlines would need infusion between Rs.2,500 crore and Rs.3,500 crore for its revival and this amount had to come as equity and not as a loan.

Mr. Chaudhuri said merger of more of the group banks with SBI would be on the agenda of the State Bank Group in the coming financial year. Two of the seven sister banks had already been merged with the SBI.

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“(CRR) and a 50 basis-point cut in repo rates, saying that these would do enormous good to the economy, at a time when credit absorption was flagging due to high interest rates”

This is not reasonable. The CCR is already low. CPI about 10%. You still want to increase the money supply?. It will hurt the power more. Yes it will help the business and the stock market. Be reasonable. Some time back, SBI even want to abolish the CRR. My advise tot the depositors will be “ the banks cannot be trusted any more”.

Gopinathan Krishnan is a Scientist in Bangalore.

from:  Gopinathan krishnan
Posted on: Jan 11, 2013 at 08:14 IST
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