Bankers want RBI to cut rate and release liquidity

With peak festival season around the corner, bankers are pressing for a cut in CRR and policy rates by the Reserve Bank in its monetary policy later this week to boost demand for manufactured goods and revive sagging economic growth. "We have made our recommendations for releasing the liquidity, making it more accessible, making it less expensive," State Bank of India (SBI) Chairman Pratip Chaudhuri said. "We have recommended a cut in CRR, repo rate and asked RBI not to restrict the MSF to a particular number. Whatever excess SLR banks hold that should be available for MSF (marginal standing facility)," he said.

RBI is scheduled to announce the mid-quarter review of the monetary policy for 2013-14 on September 20. In July, RBI raised bank rate and MSF to banks by 2% to 10.25% making loans costlier, in its bid to contain slide of the rupee against dollar. Introduced during the 2011-12 period, MSF allows banks to borrow money from the central bank at a higher rate when there is significant liquidity crunch.

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