In a crucial pre-policy consultations of RBI with Urban Cooperative Banks’ representative, HK Patil, Chairman of NAFCUB demanded relaxation of interest rate and infusion of liquidity in the system. He advocated a cut of 50-75 basis points in CRR and 25-50 basis points reduction in repo rate.
Urban Cooperative banks were led by the Chairman of NAFCUB HK Patil and others while a battery of top brass of deputy governors represented Reserve Bank of India.
H K Patil also observed that with share of agriculture sector coming down to 13.9% of GDP and the percentage of population dependent on the sector remaining at a high of 58%, the divide between poor and well off was growing although there was an overall improvement in absolute terms on all basic parameters.
The pre-policy consultation of RBI was chaired by Mr Gokarakn, Deputy Governor of RBI. Other deputy governors including Dr.K.C.Chakrabarty, Mr Anand Sinha, and Mr H.R .Khan, along with concerned Executive Directors and CGMs, Legal Advisor and other officials of RBI were also present. The two pre-policy consultations each year are usually chaired by RBI Governor who was not available this time due to some pressing engagement.
From banking side apart from Patil, Anaskar Chairman, Maharashtra State Urban Banks’ Federation, B.Subrahmanyam, MD, National Federation of State Cooperative Banks (NAFSCOB), Mattew Titus, ED, Sa-Dhan, Kalyanasundaram, CEO , INAFI India, MDs of two RRBs-participated in the consultations. Former Chief Executive and now adviser of Nafcub Mr G Krishna was also present in the consultations.
Mr Anaskar Chairman, Maharashtra Urban Cooperative Banks’ Federation asked the RBI to get the ban on loans to directors and relatives removed by taking up the issue vigorously with the Govt. of India.
Mr Subrahmanyam, MD, NAFSCOB suggested reduction in interest rate at the earliest as the high interest regime was playing havoc with state cooperative banks as the loaning at 7% even with the built in subvention as it was highly unviable to lend at these rates with the existing cost of funds.
Mr Titus, ED Sa Dhan wanted early resumption of loans to small and medium sized MFIs by commercial banks as the Andhra Effect was still being felt by the sector. The MFI Bill before the Parliament was by and large acceptable, he said.