RBI rules out further cut in Bank Rate, CRR

NEW DELHI, MARCH 17. The Governor of the Reserve Bank of India, Dr. Bimal Jalan, today ruled out any further cut in the Bank Rate and the cash reserve ratio (CRR) immediately, but said the central bank was in favour of low interest rate regime.

``Not right now," Dr. Jalan told reporters after the meeting of the RBI board with the Finance Minister, Mr. Yashwant Sinha, when asked if the apex bank would reduce the Bank Rate and the CRR from the present levels. But he did not rule out a revision in the Bank Rate in the next fiscal saying "we are always thinking about it (of reducing the Bank Rate). We want to maintain it (low interest rate regime)." The RBI slashed the Bank Rate (the rate at which the RBI lends money to banks) twice by 0.5 per cent during February-March to seven per cent from eight per cent and also reduced the CRR by 0.5 per cent.

On the issue of alleged price rigging prior to announcement of merger of UTI Bank and Global Trust Bank (GTB), he said, "All the issues being raised will be looked into, including their swap ratio."

Dr. Jalan said the bank would take a final view of allowing the UTI-GTB merger once all information was available from the Securities and Exchange Board of India. "No final decision has been taken as yet," he said.

Asked about banks' exposure to the stock markets, the RBI Governor said, "It is going to be reviewed. We will review the whole policy." Although banks are allowed to invest up to five per cent of their credit in equities according to RBI's prudential guidelines, their aggregate exposure is less than two per cent at present.

Dr. Jalan also expressed hope that government borrowings would be well within the budgeted target of about Rs. 117,000 crores in 2000-01.

- PTI

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