CRR cut to save Rs 200cr: SBI's Pratip Chaudhuri

The Reserve Bank of India (RBI) kept the repo rate-the key policy rate-unchanged in its mid quarter monetary policy review, but cut cash reserve ratio (CRR) by 25 basis points to 4.50%.

In an interview to CNBC-TV18, Pratip Chaudhuri, chairman, SBI welcomed the move. "For us, it is a relief of about Rs 2,500 crore. If we put 8% value on that, it comes to a saving of Rs 200 crore," he said. Don't miss: Why RBI chose not to cut policy rate and instead ease CRR? Below is edited transcript of his interview on CNBC-TV18. Q: Is it enough for you to start cutting rates now, you have got what you wanted, a CRR cut? A: Yes, not to the extent we would have hoped. But it is a very welcome step. Our Asset Liability Committee would meet tomorrow itself. Q: How much do you think rates might come down now, given the CRR cut? A: For us, it is a relief of about Rs 2,500 crore. If we put 8% value on that, it comes to a saving of Rs 200 crore. So, let us see where we can spread it out more. In our consumer segment, home loan and car loan, prices are already the lowest. So, let us see. We would like to make more cuts in the manufacturing, SME and industrial segment because that is where the demand has not been stimulated. Q: Do you think, in those segments, it is possible to reduce by 25-50 bps? A: Our ALCO will have to do the exact number crunching. Q: You almost started a war in the retail space by being the first to cut a lot of retail product loans. Will you carry that forward? Do you think that that space is going to see lower rates? A: In retail, we are already at the lowest. I think there is a case for stimulating demand in the industrial sector. I do not think it is right to look at uni-matrix of inflation. We also need to look at the IIP numbers. What has put us in BRICs? It is 8-9% growth. If you have to surrender all that growth, we would not find a place in the committee of nations showing high growth. So, we also need to look at the IIP numbers, the growth numbers. It is my belief that once the growth numbers are good, once the supply is augmented, inflation would come down. Look at what has happened in telecom, airline or even in the auto sector. The prices have been held stable or they have gone down with the increase in supply. So, we should try to work under supply side more than trying to contain the demand. Q: How do you read this move for the journey forward? Do you think this is the start of a series of cuts because the RBI is shifting its focus to growth or would you read this as a one off? A: No, it is a very positive move. Though it is a mid-term policy, it is very significant. I think RBI has given a clear signal that they are willing to respond and they have taken note of the signs of deceleration in the economy. Q: Will you expect more in October? A: We’ll see how the economic data comes around. I think it would be largely based on that.