RBI may cut CRR,repo by 0.25: Bankers

Last month,RBI slashed CRR cash reserve ratio the percentage of deposits that banks have to keep with the RBI from 5.5 per cent to 4.75 per cent. With this,the central bank had infused Rs 48,000 crore into the economy.

Indian Overseas Bank Chairman and Managing Director M Narendra said,8221;Given the microeconomic condition,there is expectation that the RBI would cut both repo and CRR by 25 basis points 0.25 per cent8221;.

Showing persistent sluggishness in the economy,industrial production growth slowed to 4.1 per cent in February this year,mainly due to poor performance of the manufacturing sector and consumer goods segment.

At the same time,inflation has been hovering around 7 per cent and global crude oil prices are still over USD 100 per barrel,adding to inflationary pressures. The inflation was 6.89 per cent in March much above the RBI8217;s comfort level.

RBI,which increased the key policy rate 13 times between March 2010 and October 2011 to tame inflation,did not hike the repo rate short term lending rate in the last three policy reviews.

On the other hand,India8217;s GDP grew by the slowest pace in the last 3 years to just 6.1 per cent in the third quarter of 2011-12.

Mutual Funds Check for top funds

The GDP growth rate for the third quarter was lower compared to 6.9 per cent in the previous quarter and 8.3 per cent in the same quarter last financial year.

Since October 2011,the repo of RBI has stood at 8.5 per cent. Repo rate is the signalling rate. Other policy rates like reverse repo and bank rate adjust automatically with change in the repo rate.

On the possibility of repo rate reduction by the RBI,Chaudhuri said,8221;I am not too hopeful and frankly I don8217;t think this is material8221;.

According to Bank of Baroda Chairman and Managing Director M D Mallya,8221;We saw last year that growth was not very substantial. We have seen the overall interest rate scenario reigning high. So,perhaps some policy measures are required to ensure growth is also catered to without compromising on inflation.8221;

Mallya said overall liquidity is likely to improve after Government spending starts.

Hit by tight liquidity conditions,banks are still borrowing on an average about Rs 80,000 crore from the central bank every day.

Punjab National Bank Chairman and Managing Director K R Kamath said on the one hand there is an issue of inflation and on the other economic growth is moderating.

8220;So,I find its difficult task for the governor to select between the the growth and inflation,8221; Kamath said.

Punjab amp; Sind Bank Executive Director P K Anand said 8220;There could be some token cut by RBI to prop up growth. It could be about 25 basis points8221;.