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Mr T.S. Narayanasami

Our Bureau

Chennai, Aug. 1 The measures taken by the RBI are quite warranted and necessary in the backdrop of mounting forex inflows.

While the move to lift the cap on reserve repo will increase the short-term interest rates, the additional impounding of CRR can lead to a temporary rise in the interest rate scenario in the securities market. This trend would stand corrected by itself on account of higher forex inflows expected and the resultant liquidity in the system.

In a scenario where liquidity is aplenty, interest rates on resources have to be considerably moderated.

This would also facilitate the banks to meet the extra cost burden arising out of CRR hike.

More Stories on : CRR & Bank Rates | Credit Policy

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