Bankers across the country hope the
liquidity tightening measures announced by the Reserve Bank of India (RBI) are temporary and will be rolled back once the rupee stabilises.
The central bank late on Monday night announced a slew of measures like
raising cost of borrowing by banks by 2 per cent, to 10.25 per cent, and conduct a sale of bonds worth Rs 12,000 crore through open market operations to suck liquidity to check rupee slide.
The rupee had earlier this month touched a life-time low of 61.21 to a dollar. RBI's measures strengthened the currency to 59.20 against the US dollar in noon trade, against a previous close of 59.89.
"These measures are temporary, to calm down volatility. We are not taking that these measures will be long term. I think once the rupee stabilises, these steps should be largely rolled back," State Bank of India Chairman Pratip Chaudhuri said.
On the
impact of RBI measures on interest rates, Chaudhuri said: "Impact on loan growth depends on how long these measures stay. Deposit rates do not have such a close correlation with the money market".
The central bank is scheduled to announce its first quarter monetary policy review on July 30.
"RBI action is towards the forex side of market and to contain volatility in rupee," Bank of Baroda Chairman S S Mundra said, adding it would be too early for the central bank to change the policy stance.
UCO Bank Chairman Arun Kaul said RBI's step is a temporary measure and the bank has to wait for some more time to decide on the impact of this move.
"The objective of RBI action is to compress liquidity. The implications are same as repo rate hike. RBI has opted for that time which is slack in terms of credit demand," Kaul said.
With inputs from PTI
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