State Bank of India pitches for cut in repo rate, CRR
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Pitching for a cut in interest rates and cash reserve ratio by the Reserve Bank, SBI Chairman Pratip Chaudhuri today said the move will boost investment and growth.
"As RBI's monetary policy review is slated on January 29, we have already requested for a cut in cash reserve ratio by up to 100 basis points (1 per cent) and repo rate by 50 basis points (0.5 per cent)," Chaudhuri told reporters here at an event.
Stating that he was thankful to RBI for reducing CRR, the amount banks have to keep as deposits with the central bank, from six per cent to 4.25 per cent, he said in view of high inflation prevailing in the country the interest rate needs to be lowered to avoid stagnation.
"Inflation can be contained by boosting the manufacturing sector and raising supply for which high investment is required," he said, adding that interest rates should be cut to increase investment.
"If inflation and stagnation are allowed to persist, it will create a grim situation of stagflation," he said.
Lowering of interest rates, he said would considerably improve the investment climate which remained sluggish.
Rise in investment would also brighten the employment scenario by giving a boost to economic activities, the SBI chief said, warning that India might face an Europe-like
situation if the prevailing scenario continues.
Admitting growing non-performing assets of SBI, Chaudhuri said it was primarily due to economic slowdown and the bank has decided to be patient as "this is a cyclic process and well under control".
Voicing concern over situation in states like Odisha, particularly in the steel sector, Chaudhuri said restrictions clamped recently due to environmental reasons and excess mining had caused setback and NPA in Odisha stood at some Rs 2,500 crore.
"But in these cases if we don't remain patient, the situation will worsen," he said, adding that "we need to differentiate between willful defaulters and others".