Bankers call for lower CRR

Top level bankers around the country are now urging the RBI (Reserve Bank of India) to cut the CRR (Cash Reserve Ratio) further, to lower interest rates in the country.

Cutting the CRR would mean that the the banks would have more disposable assets at hand, which in turn might also help them reduce their lending rates. Given that the economy still needs to gain stability to recover, these steps could make a large difference to the economy.

A recent poll conducted by the RBI amongst bankers, revealed that they want the CRR to be cut more than any other measure. They say a cut in the CRR would strengthen their hands to advance more credit to the economy, thus making it easier for borrowers.

However, analysts feel that it is the fiscal deficit which the RBI and the government need to address urgently, as too much leeway would further enlarge the deficit that already exists.

According to K R Kamath, the chief of Punjab National Bank (PNB) a CRR cut was preferable than a repo rate cut.

At the same time, the RBI has been closely tracking two mainline factors to determine the perfect CRR; the rupee rate vs the dollar, and also the rate of fuel prices such as diesel according to analysts.