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Wednesday, June 13, 2012

SBI pitches for CRR cut to spur growth

State Bank of India (SBI) expects the Reserve Bank of India (RBI) to cut the cash reserve ratio (CRR) by 1 percentage point to boost economic growth and improve the bottomline of banks.

“We are expecting a 1 percentage point cut in CRR. …We have made a request but it is for the RBI to take a call. We will be very happy if there is 1 percentage point cut. It will recharge investor sentiments, the economy and also stock markets,” Mr Pratip Chaudhuri, Chairman, SBI, told newspersons on the sidelines of a meeting here.

CRR is the portion of deposits that banks are required to keep with the central bank.

Mr Chaudhuri said CRR was a more effective tool in spurring growth than policy rate reduction by the RBI. “A CRR cut is six times more effective than a policy rate cut,” he said.

The SBI Chairman also highlighted that a CRR cut would improve the profitability of banks and reduce the Government's burden for re-capitalisation of banks.

krsrivats@thehindu.co.in

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