CRR hike won't affect interest rates or credit flow: Subbarao

RBI-GOVERNOR

Mumbai, Jan 29 (PTI) The Reserve Bank of India Friday
said its decision to hike Cash Reserve Ratio will not harden
interest rates immediately or impact the credit flow to the
private sector.

In its quarterly monetary policy review Friday, RBI hiked
the Cash Reserve Ratio (CRR)-- the amount banks have to park
with the central bank-- by 0.75 percentage points to 5.75 per
cent.
"(Despite the CRR hike), there will be sufficient
liquidity in the system to meet the potential demand from the
private sector," RBI Governor Subbarao told reporters here.
RBI has left the short-term lending and borrowing rates
unchanged at 3.25 per cent and 4.75 per cent respectively.
Subbarao, who met bank chiefs earlier in the day to
discuss the policy measures, said banks have informed him that
the hike in CRR would not put an immediate pressure on them to
up the lending rates.
Banks also said that loan growth prospects in the system
remain favourable but expressed concern that bad loans could
increase going forward, particularly from the restructured
assets.
Subbarao said the lenders also expressed concern over
their growing exposure to the infrastructure sector and wanted
government intervention to address the asset-liability
mismatch. PTI AP
RBT


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