Financial Daily from THE HINDU group of publications
Saturday, Jan 19, 2002
Financial Daily from THE HINDU group of publications Saturday, Jan 19, 2002 |
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Money & Banking
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CRR & Bank Rates `No time-frame for CRR cut' Our Bureau
MUMBAI, Jan. 18 THE Reserve Bank of India has not set any pre-determined time-frame for the one-time reduction of the cash reserve ratio (CRR) to three per cent. The Deputy Governor, RBI, Dr Y. V. Reddy, said, ``The RBI does not have any pre-determined time-frame for the CRR cut. It is only a medium-term objective.'' He told presspersons that such a cut would depend upon institutional and technological developments. A CRR cut would hinge on technological aspects such as the operationalisation of the Clearing Corporation of India, he said on the sidelines of a seminar on financial services here on Friday. Earlier in the week, Dr Reddy had said that the central bank was considering a ``package of measures'' to announce a one-time reduction in the CRR to three per cent. He had outlined three options to effect the CRR cut — one, through a phased reduction by announcing a time-table, the second was to cut the CRR as and when the opportunity arose, and the third was a one-time cut under a package of measures. The RBI had reduced the CRR to 5.50 per cent from 7.50 per cent in its monetary and credit policy on October 22, 2001. Commenting on the excess liquidity in the system, Dr Reddy said the RBI was in a position to control liquidity conditions through its daily repo auctions. However, he added, ``Our primary aim is to ensure easy liquidity conditions on any given day.'' He said, ``If some risk has to be taken in view of the macro-economic environment, it would not be to tighten liquidity.'' Dr Reddy said any excess Government borrowing was unlikely to affect the stability of the markets. ``In case of a marginal slippage, maintaining macro-economic stability will not be a problem,'' he said. Dealers in the bond market said that so far, total borrowings of Rs 1,21,750 crore or 102.44 per cent of the budgeted Government borrowing programme of Rs 1,18,852 crore had been completed. They expected an additional borrowing of around Rs 10,000-12,000 crore by the end of February.
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