The Hindu Business Line : ‘Relief on reverse repo could prove costly’

Coimbatore, Aug. 2 While the review of the annual monetary policy has been on expected lines, the outcome could prove a ‘little costly’ for the banks, Mr M. Venugopalan, Chairman and CEO of Federal Bank, said.

He was comparing the 50 basis point hike in CRR rate and the removal of Rs 3,000-crore LAF limit.

“While the CRR hike could increase the cost of funds for banks, since there is too much liquidity in the market, the relief by the removal of ceiling limit on reverse repo would not be enough. This could still prove to be a bit costly for the banks,” he reiterated.

He pointed out that there was a lot of pressure for bringing down the lending rate. “With deposit rates still remaining high, banks would find the going tough. It is bound to go southwards,” he said.

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