CRR is a waste for economy says SBI Chief
Mumbai: SBI Chairman Pratip Chaudhuri Tuesday once again expressed his open disagreement with the RBI on CRR saying it is a "waste" for the economy and successive interest rate cuts by central bank have failed to contain inflation.
"Of course, I am an incurable optimist and I had expected a 50 basis points CRR cut. I still hold that CRR is a waste for the economy," he said after RBI Governor D Subbarao unveiled the half-year review of the credit policy which had a 0.25 percent cut in CRR.
"But anyway it (CRR) has been cut by 25 basis points and governor had his own reasons and his own compulsions to see the inflation down," he said.
This is not the first time the head of the largest bank has had a run-in with the RBI. Chaudhuri had raised the issue of CRR in August too, but was vehemently countered by RBI Deputy Governor K C Chakrabarty.
"If the SBI Chairman is not able to do business as per our regulatory environment, he has to find some other place," Chakrabarty had said.
Taking a jibe at RBI's attempts at reining in inflation by effecting 10 interest rate hikes, Chaudhuri said it did yield desired result.
"But I do not think that the 10 rate increases that happened have not helped in lowering the inflation because Tuesday's inflation is largely cost push. It is not so much of demand pull," he said.
"So to try to address that the rate of interest as an instrument may not be very effective," he said.
The WPI inflation for September rose to 7.81 percent, from 7.55 percent in August.
At the same time, the central bank also raised the March-end inflation estimate to 7.5 percent, from 7 percent projected earlier.
The RBI said that despite recent moderation, global commodity prices remain high. But geopolitical developments could further flare up prices and induce inflationary pressure.