Bankers, led by IBA Chairman T S Narayanasami, met RBI Deputy Governors on Monday to impress upon the apex bank that they are facing severe margin pressure coupled with asset-growth slow-down which have hit them hard.
In such a scenario any harsh monetary measures to contain inflation would further aggravate the situation. But both the Government and Reserve Bank are under severe pressure to contain the high Inflation which called strong monetary measures to slowdown demand.
"We did express our concerns about a visible pressure on the banks' margins. Another round of hike in Cash Reserve Ratio (CRR) and Repo rates would exert pressure on the profitability of banks, which are already feeling the pinch after successive rate hikes," an IBA spokesperson told PTI here.
In a bid to arrest the ballooning inflation, now at 11.63 per cent, RBI effected a series of hikes in its key-short term rates and Cash Reserve Ratio in the previous weeks prompting the banks pass on the burden to their customers.
Following this, many banks announced a balanced hike in their lending and deposit rates to avert a sharp-decline in the margins but are understood to have seen a clear impact on their Q1, FY 09 margins on account of lesser-credit demand.
