International Business'RBI may signal end of easy monetary policy by hiking CRR'
The Reserve Bank of India (RBI) may signal the end of easy monetary policy by sucking out some liquidity from the market by way of Cash Reserve Ratio (CRR) hike, State Bank of Hyderabad (SBH) managing director Renu Challu today said.
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“RBI may increase CRR by 25-50 basis points as a token gesture for the Indian markets,” Challu told Business Standard.
CRR stands at 4.75 per cent and a hike of 50 basis points would increase it to 5.25 per cent. Top bankers and economists had already expressed the opinion the central bank could tighten the monetary stance.
“On one side, there is high inflation and on the other, the credit off- take has not been too encouraging. Therefore, the RBI is in a dilemma to do a balancing act in its forthcoming review of the monetary policy,” she added. However, Challu added the credit growth had been good in December 2009, but needed to be sustained in the near term.
She was in town to inaugurate SBH’s second branch in Lucknow. “We will open 150 new branches pan India by the end of March 2011 to add to our current tally of about 1,100.” The bank is bullish on the Micro, Small and Medium Enterprises (MSME) segment, which at present accounts for almost 15 per cent of its business portfolio.“We are eyeing a total business volume of around Rs 1,30,000 crore, in the current fiscal,” she said.