Reining in inflation dominates bankers' meet

 
Liquidity in the system was adequate to meet credit demand, and the bankers have indicated that a rate hike would be preferable to an increase in cash reserve ratio (CRR) to contain inflation pressures, Indian Banks’ Association Chairman M V Nair said. On concerns of banks, we said there will be pressure on margins in terms of savings bank rate as well as in case CRR goes up, as there is a cost involved,” he added.

“Inflation is a matter of concern. Numbers are higher than what RBI has projected... The general consensus is that there will be reasonable liquidity to support credit growth...monetary action may have to be on containing inflation,” Nair said.

But, he said, if RBI hikes the cash reserve ratio further in the annual policy, then lending rates could rise.  In that scenario, he added: “…… the CRR goes up, there is a cost involved in that.”

The RBI has asked banks to offer 3.5 per cent on savings bank deposits by calculating on a daily balance basis from April 1.

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