Top bankers on Thursday sought a reduction in the cash reserve ratio (CRR) or interest payment on CRR in the forthcoming first quarter review of the monetary policy on July 30. They also asked the RBI to relax the provisioning norms on corporate debt restructuring (CDR) and reduce tenure for foreign currency deposits to boost inflows.
However, members of the Indian Banks Association, who met RBI Deputy Governors for pre-policy consultations, felt that a cut in the repo rate is unlikely to materialise in the wake of volatile rupee. “We have requested the RBI to cut CRR as we don’t think a repo rate cut is possible given the shape of the rupee,” Punjab National Bank CMD KR Kamath said.
“We have also told them if the CRR cannot be reduced at least we should be paid interest on our deposits with the RBI... that can also enable us to bring down our lending rate,” Kamath said.
According to Kamath, provisioning that was introduced in the restructuring should be reviewed because there is tremendous pressure on demand for restructuring and banks may find it difficult to make such provisions. Bankers sought a relaxation in the CDR provisioning norms in the light of the stress in the economy due to the weakening of the rupee, he said.
Bankers also urged the RBI to reduce tenure of foreign currency non-resident accounts and non-resident external deposit accounts from the current one year to improve inflows into the country. “We have requested that if it can be reduced to at least six months, it will help us to bring some more dollars into this country,” Kamath said.