Private lender ICICI Bank said it expected the Reserve Bank of India (RBI) to further reduce its cash reserve ratio (CRR) at the forthcoming mid-quarter policy review slated for March 15.
The central bank had in January slashed CRR by 50 basis points — to 5.5 per cent — so as to free primarily liquidity worth Rs 32,000 crore. CRR is the portion of deposits that banks keep with the RBI.
“The borrowing has been high and liquidity is tight. I do expect there could be CRR cut”, Ms Chanda Kochhar, CEO and Managing Director of ICICI Bank, said.
She, however, noted that the RBI may not reduce the statutory liquidity ratio (SLR) as banks are very comfortable on the SLR front. SLR refers to the portion of deposits that banks have to park in government securities.
On the likely cut in policy rates, Ms Kochhar said the priority should be to look at the liquidity situation and then gradually look at interest rates.