BANKERS' VIEW - Bank chiefs react to monetary policy 

Tue, 27 Oct 2009 10:57:12 GMT

MUMBAI - The Reserve Bank of India on Tuesday began the first phase of its exit from expansionary policy by ending some liquidity support measures taken when the global crisis hit Asia's third-largest economy harder than expected, but left key policy rates unchanged.

It raised the statutory liquidity ratio of commercial banks to 25 percent from 24 percent effective Nov. 7, and said the collateralised borrowing and lending obligation liabilities of banks would be subject to cash reserve ratio requirements from Nov. 21.

As expected, the RBI left the repo rate at 4.75 percent and the reverse repo rate at 3.25 percent. The cash reserve ratio was held steady at 5.0 percent.

Following are reactions from top bank officials to the policy:

S.K. GOEL, CHAIRMAN AND MANAGING DIRECTOR, UCO BANK:

"In the third and the fourth quarter there will definitely be good growth in credit and overall we can expect it to come to around 18 percent. On 70 percent provisioning norm, we have told RBI to wait for some time and continue with the irate norms which are already existing. Not much of impact seen because in case of commercial real estate, lending banks were told to keep a cap and shift a part to infrastructure and education."

MV NAIR, CHAIRMAN AND MANANGING DIRECTOR, UNION BANK OF INDIA

"The cost of funding for banks is coming down and lending rates have also come down over time. I don't think interest rates will go up or come down in the near future. There is a concern of low demand from industries. We expect demand to pick up from the second half of the (fiscal) year."

MD MALLYA, CHAIRMAN AND MANAGING DIRECTOR, BANK OF BARODA

"I don't see any change in rates at this point of time. I think stable rates will prevail for the time."

YOGESH AGARWAL, CHAIRMAN AND MANAGING DIRECTOR, IDBI BANK

"Its a good policy. Its very much on the expected line. The governor may not change any policy rates because there is judgement and there are still concerns around growth.

"He has preferred to wait but he has also said that he was watching the situation and may not necessarily wait for the next-quarter policy. If he sees concerns around inflation, he could take a proactive step early."

(Reporting by Tamajit Pain and Supantha Mukherjee; Editing by Ramya Venugopal)





(Reuters)

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