The Hindu Business Line : ‘Firmest signal for banks to act’

Thiruvananthapuram, Nov. 1 The Reserve Bank’s multi-pronged strategy unravelled in the latest policy-rate setting initiative is the firmest signal yet for banks to cut lending rates, according to Dr D. K. Joshi, Director and Principal Economist, Crisil.

The move on the SLR front stood out in terms of novelty value, adding its share to making available more lendable resources at the disposal of banks.

But Dr Joshi was not sure if banks would bite the bait and start lending more to corporates, since this would depend largely on their individual risk appetite.

Liquidity and financial stability have been top in the priority list of the Reserve Bank. Inflation has ceased to be the major worry it once used to be, and the freshly injected liquidity would give the regulator the required elbowroom to intervene in the currency market and lift the rupee from the abysmal depths it has plunged to.

According to Mr Ananda Bhoumik, Senior Director, Fitch Ratings, the rupee vs dollar has been and would continue to a keenly fought battle. The performance of the dollar relative to other currencies would be watched for cues on where rupee is headed next.

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