Crisil expects RBI to cut repo rates by 50-75 bps

The Reserve of India RBI has hiked interest rate 13 times since March 2010 in its bid to tame inflation. Inflation remained high during 2010 and most of 2011. The rate of price rise in February was 6.95 per cent.

The central bank is scheduled to announce the annual monetary policy for the current fiscal on April 17.

The government8217;s fiscal deficit has touched 5.9 per cent of the GDP in 2011-12 against the earlier estimate of 4.6 per cent of the gross domestic product GDP.

Crisil also said banks are 8220;less likely8221; to pass on the entire reduction in repo rate to consumers to protect their margins as cost of funds is already high and non-performing asset are rising.

However,8221;banks might selectively reduce spreads over the base rate for new customers in order to push credit growth,8221; Crisil Director Industry Research Ajay Srinivasan said.

The research company further said the liquidity conditions would remain tight over next few months on mismatch in deposit and credit growth while government8217;s borrowing may be higher than budgetary estimates.

Crisil said it expects government8217;s borrowing in 2012-13 to be around Rs 5.2 lakh crore over the budgeted estimate of Rs 4.8 lakh crore.