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Mumbai: Bankers today said the status quo in the monetary stance of the Reserve Bank of India (RBI) is largely on expected lines taken after considering the tight liquidity situation and overall cooling inflation numbers, reports PTI.
“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 (short term lending and borrowing rates) untouched 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% and the reverse repo at 5.25%. The CRR also remains unchanged at 6%.
Rather, the central bank opted for making use of other instruments like lowering of SLR by 1% to 24% cent of their net demand and time liabilities.
It will conduct open market operation (OMO) auctions for purchase of government securities which is slated to infuse another Rs48,000 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 2% 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.
Mr 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 25th December 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 for direction. Now that it is clear we may increase the base rate,” he said.