Banks expects key rates to remain same, CRR to hike.
By Neelima Shankar
Oct 28, 2009
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Naina lal Kidwai, CEO of HSBC India said that the Reserve bank might not change its key policy rates in its review. TY Prabhu, chairman of the Oriental bank of Commerce supported her views. The bankers said that there was a possibility of a small hike in Cash reserve ratio (CRR) since there is excessive liquidity I the system. CRR is the percentage of total deposits of banks which it is required to maintain with RBI.

Kidwai, on the sidelines of a conference, said "The RBI governor is clearly concerned about inflation, while he fully understands that having expansionist monetary policy has been important to provide the stimulus we need. I expect the rates to remain flat. A little bit change in CRR is fine."

Prabhu did not comment on a possible CRR hike but said that the rates would remain same for next three to six months since there was no pressure on the apex bank to increase the rates due to adequate liquidity in the system.

S C Sinha, executive director Oriental Bank of Commerce said that he expected a hike of 25 bps in the CRR. He also backed the views regarding interest rates remaining same.

Kidwai also said that the monetary policy was not just meant for tampering with the key rates, RBI could revise rates outside the policy as well. She added that the economy had started recovering and some changes could be expected in December.

Some analysts expect the same. They expect RBI to maintain its key rates.


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