Mumbai, Dec 2: The Reserve Bank of India (RBI) can further reduce banks' cash reserve ratio (CRR) to augment lendable resources for meeting any marked increase in credit offtake by the commercial sector during this financial year, feels global investment bank JP Morgan.In its latest outlook on the Indian financial markets, JP Morgan states that though the current liquidity position of banks is adequate to meet the increased needs of industrial sector, the RBI has the flexibility of undertake monetary measures to meet any surge in corporate demand for funds.
"Total credit has increased by Rs 9,172 crore or nearly 40 per cent during the first seven months of this financial year. Of this, non-food credit including banks' investments in commercial paper, bonds and debentures has increased by Rs 6,397 crore," says JP Morgan, adding that incremental credit-deposit ratio during the April-December period this year is 58.25 per cent as compared to 43.36 per cent during the same period last year.
"Considering that we are still in the busy season, a further rise in credit demand is likely during the next few months," the investment bank noted.
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