This is regarding the latest policy announcement of the RBI reducing the cash reserve ratio by 50 bps. The intention appears to be to make lendable cash available with the banks. But keeping the loan interest rates as they are, the reduction in CRR may not yield much improvement in boosting lending. With the lending rates untouched, the industries may not be able to perform in a profitable way, and hence credit outgo may not be boosted. The interest rates need to be re-examined to raise credit outgo and, thus, create a rise in industrial production. This may also help in improving the GDP.
- T. R. Anandan, Coimbatore (HBL)
