The chairmen of some of the larger public sector banks in India expect a reduction in Cash Reserve Ratio (CRR) of up to 0.5 percent, to be announced by Reserve Bank of India in the policy review to be released on 31 July. The banks which expect this change include State Bank of India, Central Bank and Union Bank of India.
At present, the banks follow the CRR of 4.75 percent. RBI governor D Subbarao will present the monetary policy review on Tuesday.
Talking on the matter, Mr. Pratip Chaudhuri, the chairman and managing director of SBI said, "We expect a 50 bps reduction in CRR to ease money supply. Also a CRR cut will have a cooling effect on the interest rates for customers apart from better effect on monetary transmission than a repo cut."
It should be noted that in the last meeting of the banks and RBI on June 16, the key policy rates were left unchanged owing to a decrease in banking sector growth due to high interest rates.