Mumbai: SBI Chairman Pratip Chaudhuri Wednesday welcomed RBI Governor D Subbarao's remark on the need to cut mandatory CRR and SLR ratios for lenders, saying it will divert capital to productive purposes.
"I am very happy at the Governor's announcement...When we ask for the reduction in the cash reserve ratio, it is not only for selfish interest, it will help the country and the people by diverting capital for productive purposes," he said at an event here.
Chaudhuri had started a debate on withdrawing the cash reserve ratio (CRR), which is the amount of deposits banks have to park with RBI, calling it as "dead money".
Outgoing RBI Governor Subbarao had said that "perhaps" there is a need to cut the CRR and the statutory liquidity ratio (SLR), which is the amount of deposits to be alloted for investing in government securities.
"I do recognise that there is a demand, and perhaps a need, for further reduction (in CRR and SLR)," he said, adding that the RBI has "progressively" brought down CRR and SLR over the past many years.
Alluding to the same, Chaudhuri said the CRR and SLR, combined together, have come down from nearly 50 percent in 1991 to the present 27 percent, but reiterated the need for getting them down further.
Currently, CRR stands at 4 percent and SLR at 23 percent.
Meanwhile, Chaudhuri also stressed on the need for a bank to be an "all-rounder" and focus on all aspects of the business, saying that in the past two years, excessive attention has been given to bad assets management.
The liquidity tightening measures initiated by the Reserve Bank in order to stem the fall of the rupee since July 15 only highlights the need to be focused across the board, he said, noting that banks with lower retail liability profile and focused heavily on short-term money have been forced to raise their rates.
"The asset liability profile of a bank has been challenged (by the RBI measures)," he said.