Bankers keep rate cut hope alive

Bankers, on Tuesday, expressed the hope that the apex bank would cut the policy rate in future.

“The RBI has continued with its policy of proactively addressing any possible liquidity issues to ensure that liquidity remains within the comfort zone and credit is made available to productive sectors of the economy.

The market would keenly look forward to a policy rate reduction by the RBI in the coming months to give an impetus to growth,” said Chanda Kochhar, Managing Director and CEO, ICICI Bank

“The 25-basis point cut in CRR would release Rs.17,500 crore to the system. Even if deployed at an average 10 per cent or so, it would add Rs.1,750 crore annually to the bottom line of the banking system. Being festival season, the currency with public will increase and this cut may not be sufficient to meet the deficit,” said Shyam Srinivasan, Managing Director and CEO, Federal Bank

” he added

Mr. Srinivasan said the increase in provisioning for restructured assets by 75 basis points would help banks build a chest for prospective slippages.

“As concerns over inflation resurfaced, the policy is on expected lines. Clearly, in the approach towards balancing growth and inflation, there is consistency in the policy over last several quarters,” P. R. Somasundaram, Managing Director and CEO, Lakshmi Vilas Bank, said.

Chennai Bureau adds:

M. Narendra, Chairman and Managing Director, Indian Overseas Bank said in a statement that the constellation of economic and financial indicators in the review of monetary policy pointed to persisting threats from inflation more than immediate opportunities for growth. The RBI has, therefore, opted to continue with its efforts to douse the embers of inflationary expectations.

However, banks were unlikely to tweak interest rates in the immediate future considering the mounting pressure on profitability from rising non-performing assets, he said.

The bond yields were poised to remain range bound with soft bias on the hope of monetary easing in the later part of the financial year, Mr. Narendra said.