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BJP wants RBI to cut CRR to 5%

October 21, 2008 17:34 IST

Pitching for easy money policy, the BJP on Tuesday demanded that mandatory deposit (CRR) that banks keep with the RBI should be reduced to five per cent to improve liquidity and stimulate economy activity.

Accusing the UPA government of chocking growth by raising the Cash Reserve Ratio (CRR) to nine per cent, BJP member Kharabela Swain, while participating in a discussion on the first batch of supplementary demands for grants, said, "Let the CRR be brought down to five per cent."

RBI has reduced the CRR from nine per cent to 6.5 per cent during the month unlocking as much as Rs 1 lakh crore of banking funds. The central bank is slated to announce mid-term review of the credit policy on Friday during which more measures could be taken to ease the liquidity situation.

Swain also demanded the interest rates on non-resident deposits should be freed and the onus of fixing rates should be left to individual banks. Presently, the RBI prescribes a ceiling on rates that banks can give on deposits by non-residents.

Freeing of interest rate ceiling, he said, would encourage non-residents to park their funds with Indian banks which are government-owned and safe.

The others who participated in the discussion initiated by BJP member Ananth Kumar were B Mahtab (BJD), M Ramadass (PMK), Ramji Lal Suman (SP) and Anant Geete (SS). The Lok Sabha later passed the first batch of demands for grants by voice vote.

RBI cuts key interest rate

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