Senior bankers and representatives of Indian Banks Association (IBA) met Reserve Bank of India (RBI) Governor Y V Reddy today, and presented their feedback on the ground-level liquidity condition. Bankers told RBI that resource crunch is still an issue."Liqudity is tight in the system in the light of huge growth in credit offtake," IBA chief executive H N Sinor told reporters after the meeting with Governor Reddy."There is a significant shift in deposit mobilisation pattern now. Earlier, there was a strong mix of retail-and-current deposits, but now banks are resorting to bulk deposits. MFs have become strong competitiors to banks for attracting funds. We discussed how deposits could be made more attractive to investors," Sinor said.IBA has suggested de-regulation of NRI deposits, a cut in cash reserve ratio (CRR) and further unwindig of securities under the market stabilisation scheme (MSS) to tackle the liquidity crunch."Once the infrastructure projects take off, there would be strong demand for resources, which could put further pressure on banks," Sinor said.IBA chairman A K Purwar said that with incremental credit-deposit (C-D) ratio at 100%, resources (liquidity) is an issue.Other issues discussed were the interest rate scenario, agriculture lending, infrastructure financing, hybrid capital instruments and implementation of Base-II norms.
