The government is expected to carry on with its current policies to assure economic stability in the approaching Union Budget, said a leading banker.
ICICI Bank’s non-executive chairman, K V Kamath told media that the government consistently believed in steady policies and it is expected to stick with them in the forthcoming budget. Kamath was talking on the sidelines of an event held by the Institute of Chartered Accountants of India in Mumbai.
When asked about the effect of the Cash Reserve Ratio (CRR) increase, Kamath said that this increase won’t have a serious effect on accessibility of credit or its rates.
Commenting on the impact hike announced by the Reserve Bank last week, the hike in CRR would not have a serious impact on its pricing.
RBI raised its cash reserve ratio by 0.75 % to 5.75 % in its fiscal policy review last Friday. The move will be applied in 2 steps. The first 0.50% increase will be implemented on February 13 while the remaining 0.25% increase will be implemented on February 27. With this move, the bank expects to remove Rs 36,000-crore (Rs 360 billion) from the system.
Kamath believed this step was necessary to combat inflation and won’t seriously affect the accessibility or rates of credit as there was a lot of liquidity in the system.
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