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05-29-2013, 12:33 PM #1
RBI should cut CRR by 0.75-1% cut to boost growth: SBI
Country's largest lender State Bank of India (SBI) would like a 0.75-1 percentage point cut in cash reserve ratio (CRR) by the Reserve Bank to boost liquidity in the system and spur growth, a top bank official said on Wednesday.
"This is my wish list," SBI Managing Director and Chief Financial Officer Diwakar Gupta said on the sidelines of a conference in Singapore, at which India's financial leaders said the country would return to high growth and see increase in capital inflows in the coming months.
While market regulator Sebi Chairman U K Sinha said investments in 2013-14 would exceed $24.55 billion, ICICI Bank Chairman K V Kamath said Indian economy would recover in the next six months to one year.
The three top financial leaders expressed their full confidence in the government and economy.
Gupta said, meanwhile, the cut in CRR, the portion of deposits banks are required to keep with RBI, would help banks reduce their prime lending rates by 2 per cent to about 7.5 per cent from the current 9.75 per cent to 10 per cent.
RBI's next monetary policy review is on June 17.
India should have a prime lending rate of between 5 per cent and 6 per cent, he said, pointing to the average of 2 per cent rate worldwide.
Lower rates would boost liquidity in the Indian economy, he said at the inaugural of the event 'India Dialogues'.
The Indian economy would be on the recovery path with lower interest rates and pro-investment measures already announced and to be announced by the government in the coming months.
Meanwhile, Sebi's Sinha said investments are flowing into India. "Right now we have got about $7 billion in April and May," Sinha said, adding that the investment in 2013-14 would exceed the $24.55 billion.
ICICI Bank's Kamath said the Indian government is tackling the infrastructure bottleneck.
Lauding some of the pro-investment measures announced recently by the Cabinet Committee on Investments (CCI), he said more such steps are likely in the next six months.
CCI is making sure that coal and other raw material were available for the country, Kamath said.
Imported coal would help start up some 25,000 MW of power plants that have been completed but were operationally delayed because of shortage of local coal supply.
Some 300 Singapore businessmen at the Standard Chartered Bank-sponsored dialogue expressed concerned about the slowdown of the Indian economy and infrastructure bottleneck among others.
"The worst is over," said SBI's Gupta, adding that efforts were being made to bring back the investors' confidence in India.