In the light of credit offtake not picking up despite ample liquidity in the system, the RBI is likely to keep policy rates unchanged in its annual monetary policy, to be unveiled on Tuesday, but may impress upon banks to step up lending to sectors slowing down.
In the light of credit offtake not picking up despite ample liquidity in the system, the RBI is likely to keep policy rates unchanged in its annual monetary policy, to be unveiled on Tuesday, but may impress upon banks to step up lending to sectors slowing down.
The RBI has given enough indication to banks to ease rates in response to a series of policy rate cuts undertaken to ease liquidity pressure and step up growth.
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As recently as two weeks ago, RBI Governor D Subbarao at a seminar had said, "The response of (the) banking system (to the policy actions) has been positive ... but banks are yet to respond as much as warranted by the policy."
According to UCO Bank Chairman and Managing Director SK Goel, "I think (the) RBI is unlikely to alter policy rates. It would rather maintain (the) status quo this time."
He, however, expects the apex bank to advise all banks to ease rates in step with policy rate cuts so far post the Lehman crisis.
Indian Bank Chairman and Managing Director MS Sundararajan said there is enough liquidity in the system and the RBI would like to ensure adequate credit flows to productive sectors.
After reaching a peak of 29.4 per cent (Rs 5,82,344 crore) on a year-on-year basis as on October 10, 2008, non-food credit growth has declined sharply.
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