AIAI asks for slashing key rates
An industry body has sought Prime Minister Manmohan Singh's intervention to deal with the difficult liquidity position in the banking system and demanded further cuts in the cash reserve ratio, statutory liquidity ratio and the key short-term repo...
By PTI |
MUMBAI : An industry body has sought Prime Minister Manmohan Singh's intervention to deal with the difficult liquidity position in the banking system and demanded further cuts in the cash reserve ratio, statutory liquidity ratio and the key short-term repo rate.
The Reserve Bank needs to slash its cash reserve ratio (CRR) from the present 5.5 per cent to 4.5 per cent, All India Association of Industries (AIAI) President Vijay Kalantri said in a memorandum submitted to the Prime Minister.
Besides, the apex bank must cut statutory liquidity ratio (SLR), the amount of deposits banks must invest in government securities, to 20 per cent from the present 24 per cent and bring down its repo rate to 5 per cent from the present 7.5 per cent, Kalantri said.
These steps need to be implemented quickly to restore liquidity in the banking system, as the liquidity obtained from the recent CRR cuts would be quickly absorbed to meet outstanding commitments, he said.
Since early-October, the Reserve Bank has cut CRR as well as the repo rate in a bid to infuse much-needed liquidity into the system as well as to give a fillip to economic growth, which was showing signs of slipping.
Cash reserve ratio is the amount banks mandatory park with the apex bank while the repo rate is the rate at which the apex bank lends short-term funds to banks.
Kalantri also called for narrowing the width of the liquidity adjustment facility (LAF) to 1 per cent.
The Reserve Bank needs to slash its cash reserve ratio (CRR) from the present 5.5 per cent to 4.5 per cent, All India Association of Industries (AIAI) President Vijay Kalantri said in a memorandum submitted to the Prime Minister.
Besides, the apex bank must cut statutory liquidity ratio (SLR), the amount of deposits banks must invest in government securities, to 20 per cent from the present 24 per cent and bring down its repo rate to 5 per cent from the present 7.5 per cent, Kalantri said.
These steps need to be implemented quickly to restore liquidity in the banking system, as the liquidity obtained from the recent CRR cuts would be quickly absorbed to meet outstanding commitments, he said.
Since early-October, the Reserve Bank has cut CRR as well as the repo rate in a bid to infuse much-needed liquidity into the system as well as to give a fillip to economic growth, which was showing signs of slipping.
Cash reserve ratio is the amount banks mandatory park with the apex bank while the repo rate is the rate at which the apex bank lends short-term funds to banks.
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Kalantri also called for narrowing the width of the liquidity adjustment facility (LAF) to 1 per cent.
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