British banking company HSBC has said it is
expecting a slash in cash reserve ratio (CRR) during the
Reserve Bank of India (RBI)'s credit policy announcement, as liquidity in the banking system in the country is a "cause for worry".
The central bank is scheduled to announce the credit policy April 17.
"Liquidity in the system is also a cause for worry. Government borrowing can potentially crowd out the private sector and there is a liquidity issue in the market... We might see further CRR easing from the RBI," said Naina Lal Kidwai, Country Head India, Director HSBC Asia Pacific.
In March this year,
RBI has cut CRR, the share of deposits that banks must hold with it, by 75 basis points to 4.75 per cent to ease liquidity and infuse Rs 48,000 crore into the banking system.
Kidwai, however, said the desired effect of the CRR reduction was cancelled out by a
substantial amount of cash withdrawal from the system during January-March period.
"Money
circulation in the system has more or less been counter balanced by the withdrawal. That in a way cancelled out the potential effect," she added.
With IANS inputs 
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