Bankers on Tuesday said the measures announced by the Reserve Bank of India (RBI) would provide liquidity.
“The RBI policy was in line with market expectations of a status -quo. The SLR cut is expected to provide growth supportive liquidity of about Rs.45,000 crore,” said State Bank of India Chairman Arundhati Bhattacharya.
“The flexibility regarding the date of commencement of commercial operations (DCCO) will enthuse companies with strong balance sheets to consider taking over stuck projects. With inflationary expectations at a 21 quarter low and coupled with a benign global environment, we are in the early phases of a prolonged rate easing cycle,” Ms Bhattacharya added.
“Liquidity in the system has been seen at comfortable level. The SLR cut by 0.50 percentage point will make about Rs.43,000 crore available to the banking system for lending. This may push banks to respond to repo rate cut introduced on January 15 by the RBI.
“Export refinance has been done away with and the RBI now intends to introduce liquidity through LAF only,” said Chairperson and Managing Director of Bank of India V. R. Iyer.
Mrs. Iyer also said the increase in liberalised remittance scheme to $250,000 reflected confidence of the regulator in consistency in foreign inflows. “With increase in minimum investment period to three years in corporate bonds, there will be stability in investment and the volatility will reduce,” she said.
“The decision to hold policy rates was expected given the rate cut just a few weeks ago, and in line with the central bank’s approach of observing the inflation trends over a period of time before taking policy action,” ICICI Bank CEO and Managing Director Chanda Kochhar said.
“The introduction of differential rate structures for non-callable deposits will help banks in asset-liability management. The liberalisation of outward remittance limits reflects the substantial reduction in our vulnerability to external events,” Ms. Kochhar added.
SLR cut to releaseRs.7,000 cr for SBIPTI reports:
Bankers also ruled out an immediate cut in lending rates, saying they would wait for the budget. When asked whether SBI will cut lending rates, Ms. Bhattacharya said: “I think the Governor has very clearly said it takes time for these things to work itself into the entire industry. Unless we see the credit demand picking up, I think it’s going to take a little time to cut rates.”
Reducing the SLR would release about Rs.7,000 crore for SBI, she said..
