The Hindu Business Line : ‘A balancing act by RBI’

Coimbatore, April 29 While bankers by and large agree that another hike in the CRR within a fortnight of the earlier increase by 50 bps was ‘a little’ unexpected, although inevitable, they prefer to maintain that the regulator’s approach is ‘balanced to address all issues including deposits and credit growth’.

The RBI has done a higher level of balancing by hiking the CRR by 25 bps to 8.25 per cent, Mr N. Kamakodi, Executive Director, City Union Bank, said.

Asked if CUB would resort to a rate revision, he said ‘the Asset Liability Committee will take stock of the situation and evaluate the option. The possibility of a rate hike cannot be ruled out. Our PLR at 13.75 per cent is lower compared to many other banks. So, we probably will consider matching the PLR offered by other banks and re-look the deposit rates as well.’

The Managing Director and CEO of Dhanalakshmi Bank, Mr P.S. Prasad, hailed the RBI’s stance of leaving the repo and reverse repo rates unchanged. He also did not rule out a rate revision. “We will have to revisit the pricing in some segments at least,” he said and added that the RBI has set realistic growth targets.

The Managing Director of Lakshmi Vilas Bank, Mr V.S. Reddy, while stating that the CRR hike was a ‘little unexpected’, admired the regulator’s tempered approach.

While admitting that smaller banks would feel the pinch, he ruled out any immediate rate revision in his bank. He said LVB’s PLR at 14 per cent was slightly higher than the rate offered by a few others in the industry. “We are not looking to increase the rate across-the-board. May be, wherever loans have been offered at sub-PLR, we will increase it by 25 bps.”

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