Bankers call RBI policy as nuanced; CRR move will not impact lending ability

economictimes.indiatimes.com:

Bankers said the Reserve Bank's move to impose a 10 per cent incremental cash reserve ratio will not impede banks' ability to lend while the status quo on policy rates was on expected lines. The Reserve Bank opted for the status quo in key policy rates for the third consecutive time on Thursday.

Industry lobby grouping IBA's chairman A K Goel, who also heads state-run Punjab National Bank, said the move to impose a 10 per cent incremental cash reserve ratio will not impede the sector's ability to lend. «Even after this temporary impounding of liquidity, there will be sufficient liquidity in the system to meet the needs of the economy,» he said in a statement.

Standard Chartered Bank's Zarin Daruwala said the action on CRR was surprising and pointed out that it will lead to pressure on short-term rates in the run-up to the festive season. Country's largest lender SBI chairman Dinesh Khara did not directly mention the CRR move — which will take out Rs 1 lakh crore or liquidity — at all, but termed the policy communication as «nuanced» and a document exercising caution.

«The RBI policy communication is nuanced, and has rightly exercised caution and warranted vigil on the inflation trajectory given the current jump in vegetable prices,» Khara said in a statement. Non-bank lender Tata Capital's managing director and chief executive Rajiv Sabharwal said the policy would help accelerate growth in the economy and demonstrates RBI's balanced approach considering the current economic conditions.