Don't expect rate cuts from banks immediately: BoB

RK Bakshi of Bank of Baroda spoke to CNBC-TV18 about his reading of the latest RBI move of infusing liquidity into the system by way of 50bps CRR cut.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: How much of liquidity does this 50 bps CRR cut increase for the bank? Will it warrant a cut from the banks?

A: The calculations are well known- NDTL being Rs 60 lakh crore, it releases around Rs 16,000 crore per 25 bps; So 50 bps points means Rs 32,000 crore release. But CRR being a primary liquidity creation, it can lead to multiple credit creation, and therefore, I feel that the liquidity ultimately available to the banking industry as the credit growth builds up will be slightly larger.

The system had just about adequate liquidity before this. We were drawing around Rs 140,000 crore from RBI in repo and the excess SLR with the system was around Rs 160,000-170,000 crore. So this Rs 32,000 crore is a small amount, but as I said, this is primary liquidity.

Secondly, this is an indication of the things to come and therefore it