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The 25 basis points CRR cut was on expected lines, according to the Karnataka Bank Managing Director, P. Jayarama Bhat.
Speaking to Business Line after the RBI released the second quarter review of the monetary policy 2012-13 on Tuesday, he said the cautious stand was warranted in view of the higher inflation projection for the near term and the prevailing fiscal conditions.
However, the CRR reduction might further improve liquidity and lead to a reduction in interest rates on future deposits as well as minor adjustments in lending rates, he said.
On the move to increase the provision for restructured standard accounts from the existing 2 per cent to 2.75 per cent, he said it appears to be the first step towards the possible implementation of the study report published by RBI recently.
On its impact on the banking industry, Bhat said it depends on individual banks. Banks with the maximum restructured assets may see some impact on their profitability. That would be offset by the release of the CRR balance.
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