![]() CRR puts pressure on credit growth: BOBPublished on Wed, Feb 14, 2007 at 09:21 | Source : Moneycontrol.com Updated at Thu, Feb 15, 2007 at 10:15
The Reserve Bank of India, or RBI, has hiked Cash Reserve Ratio (CRR) by 50 bps, or 0.5%, in two stages. The banking regulator will hike it to 5.75% from February 17, and to 6% from March 3. CMD at Bank of Baroda , Anil Khandelwal believes that there will be further pressure on cost of resources, which are already high right now. So the bank will take a quick review of their position and their response will be visible shortly. Excerpts from CNBC-TV18's exclusive interview with Anil Khandelwal:
A: I think so and we have to take a quick call now because the situation has changed. There will be further pressure on cost of resources, which are already high right now. So we will take a quick review of our position and our response will be visible very shortly. Q: Will 50 bps points be all or could it be even more since you had postponed the previous round of rate hike? A: We are working out and we are right now doing the calculations. We will see what is good for the bank because we have to maintain certain NIM as well as profitability. Since the circumstances have changed, we have to take quick review of our positions. Q: Do you expect that all categories of loans will be hit including home loans and retail loans? A: We will have to see everything because we cannot do business on loss. Therefore we will have to review the entire position. Q: Do you expect the total amount of loans getting taken - your credit offtick to fall? A: Certainly the whole idea of the RBI is increasing the CRR to restrict credit to certain sector. As the system has been buoyant on credit growth, certainly there will be tremendous pressure on that.
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