Bankers-RBI meet on credit policy tomorrow

Top executives of public and private sector banks will meet Reserve Bank of India (RBI) Deputy Governor Subir Gokarn tomorrow as part of the customary pre-credit policy deliberation to discuss various issues, including tight liquidity condition and base rate implementation.

"There is a meeting of select bankers with RBI Deputy Governor tomorrow. This is pre-policy meeting with bankers," Indian Banks' Association Chief Executive Officer K Ramakrishnan told PTI.

As many as 12 CEO of leading public sector, private sector and foreign banks are expected to be part of the meeting.

RBI is scheduled to come out with first quarterly review of the credit policy on July 27.

According to Bank of Baroda Chairman and Managing Director M D Mallya, it is a pre-policy meeting where the macro economic situation will be discussed.

Besides, the meeting would also take stock of credit growth, liquidity condition, interest rate scenario among other things, he said.

Even the implementation of new lending rate system--base rate--could come up for discussion, said another banker.

Base rate, the rate below which banks cannot lend to anyone, was introduced from July 1 with the objective of bringing about more transparency in lending operations of banks.

To control inflation, RBI raised the short-term lending and borrowing rates by 25 basis points last week.

Hike in repo and reverse repo by 25 basis points to 5.50 per cent and 4 per cent, respectively, "should contain inflation and anchor inflationary expectations going forward, while not hurting the recovery process", RBI had said.

Wholesale price-based inflation crossed double digits (10.16 per cent provisionally) in May. Food inflation, however, eased to 12.92 per cent in the third week of June from above 16 per cent.

Justifying its mid-course action, the RBI had said, "The developments on the inflation front, however, raise several concerns...Food price inflation and consumer price inflation remain at elevated levels. There has been some moderation in food price inflation, but the price index of food articles continues to increase."

RBI had earlier increased the repo and reverse-repo rates by 25 basis points in April.