BoI chief says pressure on short-term rates

Ahead of RBI's review of credit policy this month-end, Bank of India (BoI) chairman M Balachandran today said there is pressure on short-term interest rates because of the recent hike in cash reserve ratio (CRR) and the overall increase in cost of funds.

"There is bound to be pressure on short-term rates as resources are available but at higher costs," Balachandran told reporters on the sidelines of a seminar on micro-finance.

The central bank will announce its credit policy review on January 31. With inflation crossing its benchmark of 5.5%, banks are expecting further hike in interest rates.

Balachandran said there was no dearth of resources for productive sectors like corporates and SMEs and even genuine demand for housing loans.