Disagreeing with the comments made by State Bank of India (SBI) chief, Pratip Chaudhuri on doing away with Cash Reserve Ratio (CRR), Chairman of private sector lending major, ICICI Bank, KV Kamath said that ‘it was part of monetary policy and no issue could be made of it’.
Speaking to reporters at the 8th India Innovation Summit organised by the Confederation of Indian Industries (CII), here on Thursday, Kamath sided Reserve Bank of India’s Deputy Governor, KC Chakrabarty on the issue and stated that several tools such as Statutory Liquidity Ratio (SLR) and cash reserve ratio.
“I think the monetary authority in its wisdom uses all these tools as appropriate and that’s what is being done”, he said. Cash reserve ratio was not new and the country has always had the tool, Kamath observed. Chaudhuri had recently said that it was time that this tool was done away with as it was costing the banking sector over `21,000 crore. The Reserve Bank of India had strongly criticised the statements and Chakrabarty had said that the State Bank chairman should ‘find some other place’ if he was unable to work as per the current regulatory environment.
The Reserve Bank had criticised the statements and also dismissed the suggestions made by the SBI chief. Kamat, who is also the non-executive chairman of information technology giants, Infosys, said that cash reserve ratio was meant to be viewed as part of the monetary policy that part of it was liquidity policy for banks.