"The increase in CRR is very much warranted. It was an anticipated move and a step taken in the right direction," Canara Bank's Chairman and Managing Director, M B N Rao, told reporters after inaugurating the bank's Dharavi branch here today.
Rao said monetary tightening was unlikely to affect the growth of banks as the system now was in a much favourable position unlike in the past.
"The growth is robust...NPAs have come down substantially and liquidity is abundant in the system. Banks are in a position to double their profits," Rao, who is also the Chairman of the Indian Banks Association, said.
Banks should consider whether they could absorb the impact of the CRR and repo hikes instead of passing on the burden to their customers, he said.
"A 0.5 per cent hike in the repo need not necessarily translate into a 0.5 per cent hike in lending rates," Rao said.
Canara Bank would examine prevailing market conditions before taking a call on its interest rate structure, Rao said, adding that the bank's liquidity position was comfortable.
Despite a slight moderation in credit growth, Canara Bank has been successful in repricing its asset portfolios and has significantly increased its low-cost current account, savings account deposits (CASA) in the last year, Rao said.
