State Bank of Patiala Seeks 0.5% Slash In Cash Reserve Ratio

Prior to the central bank’s (RBI) monetary plan appraisal, public sector lender State Bank of Patiala wanted 0.50 per cent slash in Cash Reserve Ratio (CRR) that, in turn, will assist in cutting down the lending rates.

“We anticipate 50 basis points (0.50%) slash in Cash Reserve Ratio (CRR),” SBoP’s MD Achal Kumar Gupta stated when questioned about anticipations from RBI’s monetary plan appraisal slated to be held on May 3.

Cash Reserve Ratio (CRR) is proportion of deposits that banking institutions have to keep with the central bank in cash.

As per bank representatives, meager cut in repo rate would not cause decrease in the rates of lending.

Repo rate is the charge at which central bank lends money to the banking institutions.

“The rate of interest should drop for expansion to take off. Meager repo rate cut without cut in Cash Reserve Ratio (CRR) will not diminish rate of interest,” stated SBI’s Chief General Manager S Vijay Kumar.

Mr. Vijay Kumar added that it was very important that the central bank should also diminish the Cash Reserve Ratio (CRR)  that would permit more funds coming with the banking institutions for lending.

During the past week, CII President Kris Gopalakrishnan had pitched for 50 bps slash in lending rates with the intention to bring extra investments needed for pushing economic expansion.