RBI may not increase policy rates in April policy: Kamath

The country's largest private sector lender ICICI Bank today said that the Reserve Bank may further tighten money supply to tame inflation by asking banks to keep more cash with it, rather than raising policy rates in its annual policy in April.

"My feeling is based on market forces, they (RBI) may not (change policy rates). They will probably keep an eye on inflation," Kamath said on the sidelines of the Press Trust of India's Diamond Jubilee Celebrations here.

The RBI is scheduled to come out with its annual monetary policy for 2010-11 on April 21.

In its third-quarter monetary policy review last week, the bank raised the cash reserve ratio — the amount banks must keep with the central bank — by 75 basis points to suck Rs 36,000 crore out of the system and cool surging inflation.

The banking regulator, however, refrained from raising short-term borrowing and lending rates (repo and reverse repo), primarily to encourage growth which is "is yet to fully take hold".

Repo, the rate at which the RBI lends money to banks, is at 4.75 per cent while reverse repo, the rate at which the apex bank borrows, is at 3.25 per cent.

Talking about economic growth, Kamath said, "India I would think would grow at some thing like 12 per cent in the next 12 years."