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Monday 17 September 2012

Interest rates to trend downwards: ICICI boss on CRR cut

cleanmediatoday.com


Interest rates to trend downwards: ICICI boss on CRR cut
Clean Media Correspondent

New Delhi, Sept 17 (CMC) The reduction in cash reserve ratio (CRR), according to Chanda Kochhar, managing director & CEO, ICICI Bank, will help ensure that systemic liquidity remains in the comfort zone.Given the comfortable liquidity and the recent reduction in deposit rates by banks, interest rates in general could be expected to trend downwards gradually.

The reduction in cash reserve ratio (CRR), according to Chanda Kochhar, managing director & CEO, ICICI Bank  , will help ensure that systemic liquidity remains in the comfort zone.

"Given the comfortable liquidity and the recent reduction in deposit rates by banks, interest rates in general could be expected to trend downwards gradually. However, we will have to continue to keep an eye on funding costs given the level of CASA deposit growth in the system," she said in a press statement.

The Reserve Bank of India (RBI) on Monday reduced CRR by 25 basis points in its mid quarter monetary policy review. The central bank refrained from cutting the policy rate or repo rate, on back of inflationary pressure.

"RBI has been forward-looking to factor in the impact of tax outflows as also a pick up in liquidity requirements in the busy season (October-March) in its assessment of liquidity. While the steps taken recently by the government are positive for fiscal consolidation, the central bank wants to see how the deficit situation and inflation evolve before undertaking further cuts," said Kochhar adding that the year started with a 50 bps cut in interest rates by RBI, front-loading a large part of the anticipated loosening of monetary policy in the current year. 

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