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Industry hails move to empower banks to fix PLR for different maturities; CRR cut to swell banks' resources by Rs 32.5 billion

The bankers and industry associations have welcomed various measures announced by the Reserve Bank of India in its Credit Policy today.

K Kannan, chairman, Bank of Baroda, said the policy is aimed at the whole year, and it will certainly boost the banking sector. ''I'm very happy to know that the RBI has given freedom to the banks to operate different prime lending rates (PLR) for different maturities provided the transperency and uniformity of treatment orginally envisaged continues to be maintained.''

Kannan said the bank boards need not now hold meetings often to take a decision in this regard, the individual committee in the banks will take a decision in this regard.

Asked about the expectations of a possible cut in interest rates, Kannan said, ''We've not thought of it,'' and in fact, the RBI has asked suggestion after reviewing the issue, he said.

The All India Association of Industries stated that the reduction in cash reserve ratio by 0.5 per centage will further augment the lendable resources of the banks by Rs 32.50 billion. This is a welcome feature, it said in a statement.

It also welcomed fixing up interest on term loan for long- term projects and also giving authority to the banks to decide on prime lending rate and various relaxations and rationalising as per the maturities which will bring in more transparency and uniformity.

G G Vaidya, chairman of State Bank of India, felt that the policy would lead to softer interest rates, provide flexibility to banks and transparency in operations. He expects the credit off-take to pick up during the current fiscal.

''There would be a credit growth of 18 per cent this year,'' he said.

UNI

RBI Governor Bimal Jalan's policy statement

April 20, 1999: The RBI's Credit and Monetary Policy

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