RBI may cut CRR in monetary review today

December 18, 2012 09:53

Moderating inflation has raised hopes of rate cut by the Reserve Bank in mid-quarter review of monetary policy on Tuesday, but experts believe that it is more likely to cut the Cash Reserve Ratio for banks.

There has been some tightening on the liquidity front due to advance tax outgo. Following this, the banks' borrowing from the RBI has gone up to Rs 1,46,300 crore on Monday, from Rs 64,445 crore on Friday.

Experts say the tight liquidity condition will continue for a while till the government starts spending, and this makes a case for lowering of CRR.

Indian Overseas Bank Chairman and Managing Director M Narendra said, "...As on date since liquidity still has been slightly tight, I think there will be some more support to liquidity (through CRR cut).

"We will not be surprised if there will also be a symbolic repo rate cut now and a major cut in January also."

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