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Sinha welcomes Monetary Policy

CREDIT POLICY

Finance Minister Yashwant Sinha welcomed a cut in banks' cash reserve ratio announced by the Reserve Bank of India in its annual Monetary and Credit Policy on Monday, saying it indicated a continuation of a softer interest rate regime.

"The reduction in CRR is a good decision that the RBI has taken. I welcome the move. It indicates that the softer interest rate regime continues," Sinha told reporters.

India's central bank on Monday kept its key bank rate unchanged at 6.5 per cent in its annual monetary and credit policy statement for the current year that began on April 1. But the RBI cut the CRR for banks to 5.0 per cent from 5.5 per cent, effective mid-June.

"The matter of reducing the bank rate has been left open. The RBI will take a decision as and when it becomes necessary. I agree with their assessment. It's a pragmatic policy. It will further take the bank rate downward depending on the situation."

He said he did not see any adverse impact from the policy on the government's borrowing programme.

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