Banks demand status quo on rates,lower savings rates

Leading bankers asked the RBI not to squeeze money supply through policy instruments.

Leading bankers on Thursday asked the Reserve Bank not to squeeze money supply through policy instruments in the forthcoming monetary policy review and sought reduction in the deposit rates for savings accounts.

In their pre-monetary policy meeting with the apex bank,the bankers informed the RBI that they may not be able to achieve the targeted 18 per cent loan growth for the current fiscal and demanded relaxed norms for infrastructure lending.

Demanding status quo on the rates front,the bankers pointed out that the current surplus liquidity in the system is slowly drying up on the back of rising credit offtake and said that the liquidity situation does not demand a hike in the CRR or key policy rates in the immediate future.

The banking watchdog will announce the fourth quarter monetary policy on January 29. And it is widely expected that the central bank will hike CRR and revise the key policy rates in order to fight galloping inflation and economic recovery.

The bankers also asked the apex bank to lower the interest rates being paid to customers on the savings deposits in the backdrop of April 2010 deadline to implement the RBI directive requiring them to calculate savings a/c rates on a daily basis.

“Bankers feel that this would considerably increase their cost of funds. They either want the interest rates (on savings deposits) to be lowered or the status-quo to continue,” Indian Banks Association chief executive officer K Ramakrishnan said after the meeting.