The Hindu Business Line : Mid-term review of credit policy on Oct 26

Bankers said while the RBI does not wait for the bi-annual announcements to come out with monetary measures, domestic financial market participants will keenly await clues on the direction of interest rates, from RBI's commentary on the economic and interest rates scenario.

"A hike in repo rate or CRR can come at anytime. RBI introduces these measures as and when necessary. What will be interesting to note is whether they have changed their stance on interest rates to a more bearish tone", said a treasury head of a leading private sector bank.

On September 11, the central bank had hiked the Cash Reserve Ratio (CRR) of banks by 50 basis points in two phases, in an attempt to squeeze out the excess liquidity in the banking system.

Since then, the markets have been abuzz with rumours of another possible hike in CRR.

However, analysts are of the view that another hike in CRR may be unlikely in the immediate future, as it goes against RBI's medium term objective of bringing down the CRR to 3 per cent levels.

Meanwhile, the mid-term review of the annual policy 2004-05 is expected to have some additional clarifications on the guidelines for infrastructure and agriculture lending.

"Although banks are being urged to lend to infrastructure, there are not too many takers at this point. Maybe the guidelines can be eased to include a larger canvas of borrowers", said a banker.

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