http://www.thehindubusinessline.com/industry-and-economy/banking/article3839664.ece
ICICI Bank Chairman K.V. Kamath today disagreed with the suggestion of SBI chief Pratip Chaudhuri that the RBI should scrap CRR, saying it is part of the monetary policy and no issue can be made of it.
Asked to comment on the vocal slugfest between Chaudhuri and RBI Deputy Governor K.C. Chakrabarty on the issue, Kamath said in the whole issue of monetary policy, several tools are being used, including Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio.
CRR is the portion of deposits kept by banks with the Reserve Bank on which no interest is paid.
“I think the monetary authority (RBI) in its wisdom uses all these tools as appropriate and that’s what is being done.
This (CRR) is nothing new. India always had a CRR for as long as I can remember and I don’t think honestly (there is) an issue to be made here”, he told reporters.
“You should look at it (CRR) as part of monetary policy that it is exercised and part of it is liquidity policy for the banks”, added Kamath, also non-executive Chairman of Infosys Ltd. Earlier, he addressed the eighth India Innovation Summit, organised by CII.
Last week, the SBI chairman made a strong pitch for the abolition of CRR, saying that keeping required funds with the Reserve Bank without any interest was costing the banking system about Rs 21,000 crore.
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