OP Bhatt, the chairman and managing director of State Bank of India (SBI), the country's largest bank today said the repo rate or the cash reserve ratio (CRR) may be hiked by 25 basis points in the review of the monetary policy on Tuesday by the Reserve Bank of India (RBI). While CRR is the percentage of amount that banks are required to park with the Reserve Bank, Repo is the rate at which RBI lends to banks. Bhatt believes that with the current rate of Inflation it is highly likely that the central bank will continue to follow the same course of a tight monetary policy. However, other banks do not expect the RBI to tighten its monetary stance further as inflation is seen plateauing coupled with a fall in global oil prices, they expects a more ‘benign’ monetary policy so as not to impede growth.The bankers felt there could be no more hike in short-term key rates and the CRR. Industrialist Adi Godrej echoed the sentiment. “Inflation seems to have plateaued. with oil prices coming down, the RBI could be expected to come up with a benign monetary policy regime,” he said.Corroborating the view, HDFC Bank’s managing director Keki Mistry and IDBI chairman, Yogesh Agarawal said it is unlikely that the apex bank would hike rates as it would be detrimental to the industry, already affected by high interest rates. “I do not think that RBI will further hike rates at the quarterly review of monetary policy. There are no indications of a further hike in RBI key-rates,” Mistry said. The Reserve Bank has already hiked CRR by 1.25 per cent to 8.75 per cent and repo by 0.75 per cent to 8.5 per cent since April, 2008 to contain inflation. The CRR hike of 1.25 per cent, in five tranches, was aimed at sucking out excess liquidity of Rs 47,500 crore from the system.8.75 pc The current Cash Reserve Ratio8.5 pc The current repo rate0.25 pc The expected increase in Cash Reserve Ratio or repo rate
