Industry associations have welcomed the Reserve Bank’s cut in banks’ cash reserve ratio rule, but say they want more.
The central bank on Friday announced a 75-basis point cut in the CRR.
The Associated Chambers of Commerce and Industry of India (Assocham) sought another CRR cut, one of 100 basis points, before the monetary policy review next week, saying policy rates should also be slashed in the review on Thursday to stimulate fresh investment.
Assocham secretary-general D S Rawat said the focus should now be on growth momentum. “At least Rs 1 lakh crore is required in the banking system for industrial growth to bounce back to respectable levels.”
The Federation of Indian Chambers of Commerce and Industry (Ficci) said on Friday’s CRR cut was a positive surprise. It expressed hope of another CRR cut in the coming monetary policy review.
Chandrajit Banerjee, director-general, Confederation of Indian Industry, said, “RBI can qualify a policy rate cut by stating there would be no further cut in the next six months, and this which should take care of the speculative aspect associated with such cuts.”
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The real estate sector, which has been facing a fund crunch, also welcomed the move and hoped the central bank would cut policy rates by 50 basis points on March 15. R R Singh, director-general, National Real Estate Development Council, said, “As banks will get more liquidity now, I hope this translates into more funds for the real estate sector. Liquidity in the real estate sector would complete held-up and delayed projects.”
Vikas Oberoi, chairman and managing director, Oberoi Realty, said, “Any increase in cash supply is welcome. If expenditure increases, home sales would rise. The government is injecting liquidity to boost growth in the economy.”
Stock market experts were surprised by the move. They were uncertain about whether RBI would cut policy rates next week. V K Sharma, head (private broking & wealth management), HDFC Securities, said, “Ahead of the credit policy next week, the CRR cut has come as a surprise. The stock market would react very positively because the quantum is more than the expected 50 basis points. However, to expect the central bank to cut the repo rate on March 15 would not be appropriate.”