The controversy over the relevance of Cash Reserve Ratio (CRR) has resurrected with HDFC Bank, India's second biggest private sector lender pitching for a review on quantum of deposits that banks need to park with the Reserve Bank of India (RBI).
"Some amount of CRR is necessary but the quantum can be examined. Also, it is necessary to review if we have to pay interest on CRR. Most countries have CRR in place but a lower amount”, HDFC Bank's managing director Aditya Puri told Business Standard on the sidelines of a press meet here.
Last month, SBI chairman Pratip Chaudhuri stirred up a controversy after he suggested abolition of CRR, stating that keeping the CRR balance with the RBI was costing the banking system Rs 21,000 crore.
Chaudhuri's statement evoked a caustic reaction from RBI Deputy Governor K C Chakrabarty.
“He (Chaudhuri) has to find some other place if he could not work as per the Central bank’s regulatory environment”, Chakarabarty had said without mincing words.'
Meanwhile HDFC Bank said it would take a call on cutting lending rate after a meeting of its asset liability committee (Alco).
The private bank said further it had a healthy balance sheet dominated by retail lending which contributed 55 per cent to its loan book.
"Our retail lending is expected to grow only marginally this fiscal as there is also a good demand from the corporate sector. Out NPA is amongst the lowest in the banking industry and margins are not stressed. The bank's capital adequacy ratio is 16 per cent”, said Puri.
On financial inclusion, he said, “Financial inclusion is a political, social and economic necessity. At the same time, we cannot have a runaway fiscal deficit. Subsidies have to be gradually brought down as no government has enough money to subsidize everybody.
Asked about new banking licenses, Puri said, “We welcome it. Let the new banks come as there is demand.”
On expansion of retail banking in Odisha, he said, the bank had decided to scale up its branch network in the state to 100 by the end of 2012-13, up from 70 presently and to 150 in the next 18-24 months. The 30 branches to be added in the state were expected to come up in semi-urban areas.