RBI Policy: Banks cautious, not to raise rates in the near term

K R Kamath tells RBI it is difficult to maintain high CRR balance

Indian Banks' Association Chairman K R Kamath has told the RBI that maintaining daily cash reserve ratio at 99% of mandated level becomes operationally difficult, he told reporters at the post-policy conference on Tuesday.

Currently the cash reserve ratio (CRR) stands at 4%.

But bankers saw no need to raise interest rates immediately.

Top lender State Bank of India can wait for two to three weeks before taking a call on increasing lending rates, its Chairman Pratip Chaudhuri said. Axis Bank Chief Executive Shikha Sharma also said she sees no need to raise interest rates immediately.

The RBI left interest rates unchanged on Tuesday as it supports a battered rupee but said it would roll back recent liquidity tightening measures when stability returns to the currency market.

The central bank had taken steps earlier this month to squeeze rupee liquidity in the banking system to support a weakening rupee.