New Delhi: Industry body Assocham on Monday asked the Reserve Bank, which is reviewing its monetary policy on Tuesday, to maintain interest rates at present level, saying any tampering would derail India Inc plans for industrial expansion.
In a note submitted to the RBI by Assocham president Sajjan Jindal, the chamber argued that any upwardly tampering with the present cash reserve ratio of 8.75% and repo rate of 8.50% would completely derail India Incs programmes of borrowing for their industrial expansion and modifications as the cost would go up.
Cash reserve ratio (CRR) is the percentage of deposits banks are required to park with the RBI while repo is the rate at which the central bank lends to banks.
The chamber is not reiterating for decrease in CRR and repo rate as the inflationary pressures on Indian economy would remain for some more time, it said.
According to Assochams estimate, as a result of the RBIs decision to revise CRR and repo rate recently, the cost of borrowing from SBI has gone up by 12.75%, while for ICICI and HDFC it has gone up by 16.5% and 16% respectively.
The chamber further pointed out that increase in CRR and repo rate would not only affect banks, their lendings, but also stock markets, manufacturing, agriculture and realty sectors, besides equally adversely affecting deposits.
—PTI
