Friday, July 24, 2009

RBI Expected To Put Down Key Rates Untouched - July 24, 2009

Surplus liquidity in the banking system and low demand for credit may prompt the Reserve Bank of India (RBI) to maintain a status-quo in its key rates. In the quarterly review of its annual monetary policy, the central bank is also expected to put down a clearer roadmap to conduct the government-borrowing programme in a proper way. It may also hike the GDP and inflation forecast for FY''10.

Uco Bank CMD S K Goel said that there is enough liquidity in the banking system, even though, they may keep headroom to lower the cash reserve ratio (CRR) and any cut is doubtful in the current policy. Hence, it may leave the repo and reverse repo rates unchanged.

Additionally, he said that given the difficult market conditions, the apex bank might relax the NPA norms for stress-ridden sectors and extend the deadline for loan restructuring.

The possibility of hiking the SLR (statutory liquidity ratio) requirement of banks to 25% from the current 24% cannot be completely ruled out.

Since October last year, in order to arrest the slowdown in the economy by stimulating demand the apex bank has trimmed its CRR to 5%, repo and reverse repo rates to 4.75% and 3.25% respectively.

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