An Honest Admission

Nanoo G Pamnani

Chief Executive Officer, India & Area Head-Bangladesh, Nepal and SriLanka, Citibank NA

This is a unique monetary policy statement. Though the RBI has cut CRR and the bank rate, it cautions the financial system from getting carried away. The Reserve Bank has suggested that further interest rate cuts may not be forthcoming. It has also referred to the structural rigidities impacting the ability to transmit the benefit of its latest actions to the economy in general. There is also a clear communication on the limitations of the monetary policy to spur growth. While the bank rate cut was in line with expectations, the higher-than-expected 200 bps cut in CRR actually translates to a much lower percentage considering the withdrawal of various exemptions relating to deposits of non-resident Indians (NRI). A consistent policy regarding the NRI retail deposits is essential for banks to actually market in this critical segment.

Given the RBI