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Topic : Govt measures for credit crisis
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Will the CRR cut ease the market?

Created by : Ganesan S, Client Servicing/Key Account Manager, Citibank  | 10 07 2008 06:15:02 +0000
Industry : BankingFunctional Area : India(Markets)
Keywords : Market Banks Inflation RBI Funds Credit Crunch Cut Interest Rates Liquidity Cash CRR Monetary Policy Ease Cash Reserve Ratio
Activity:  362 views;  last activity : 04 20 2011 10:17:37 +0000
What do you say?
  
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yes it will lead to the decrease in cost of funds of the commercial banks which in turn will reduce base rate which is benchmark for lending. when interest rate decreases the intrinsic value of financial securities increases which will lead to increase in market capitalization of the market.
By Danish khan, Business Analyst, cognizant business consultancy  03 28 2011 01:46:04 +0000
 
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I dont think CRR cut will anyway help Indian Corporate Sector. It only helps if money is available at 3 to 4% a year.
By Kaushal , Sales/BD Manager, Kotak Life Insurance  02 15 2009 13:53:24 +0000
References :
RBI cuts CRR by 0.5%Oct 6, 2008 ... The central bank's move will infuse Rs 20000 crore (Rs 200 billion) into the markets.www.rediff.com
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May be, as I am not expert from finance sector. Thanks for referral, Danish.
By SHRIKANT MANOHAR DANKE, Consultant, Project Management Consultancy Firm  | 04 20 2011 10:17:36 +0000
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Yes. Credit flow will increase. And interest rates will moderate. And now those who have access to this cheap credit can either borrow for productive investments or for speculative purposes. Govt should followup with measures to curb speculative activities so that the common man will benefit from this cut
By Raju V P, Senior Manager, an International Bank  | 04 03 2011 13:00:55 +0000
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This step may induce banks to lower commercial lending rates...
By Ganesan S, Client Servicing/Key Account Manager, Citibank  | 10 07 2008 06:16:22 +0000
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Definitely no based on both the above arguments plus the factor of lending risks due to slowdown in Industry & lowered consumption trend topped up with high interest rates still prevalent due to high inflation.
By Reuben Ray, Cluster Head, Commercial Finance-Tata Capital Ltd  | 10 17 2008 11:26:44 +0000
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In short term there wont be much change..there is simply too much panic in the market. Govt will have to push the Banks to restart funding atleast to the corporates who are on a stable wicket. rates will stay high in the short term as there is pent up demand.


By chandrashekhar deshpande, Branch Manager/Regional Manager, HDFC Bank  | 10 12 2008 13:07:37 +0000
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Ganesan, definitely this move will release some tension in the market, but I do not expect any immediate cuts in lending rates. Banks will be very selective in disbursing funds. This cut is a temporary measure by RBI and tight monetary policy is likely to continue because inflation is well above RBI’s comfort level......
By Omkar Bapat, Client Servicing/Key Account Manager, HDFC Bank  | 10 07 2008 06:30:07 +0000
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