For quite sometime, the country has been witnessing massive capital inflows, a significant part of which is due to the wide interest rate differential between the US and India. Another hike in the cash reserve ratio (CRR), now at 7.5%, by the RBI may not be far off if fund inflows continue to squeeze the net interest margins of banks. The discontinuance of interest payment on CRR balances by the RBI has made things even worse for banks. Therefore, banks requesting the RBI to raise the ratio only on incremental deposits is perfectly understandable. Globalisation has presented India with a problem of plenty as far as fund inflows are concerned. Countries like China and Thailand have reportedly adopted new instruments to tackle the delicate issue of excessive inflows. It?s time for the RBI to explore some unconventional measures instead of resorting to any further CRR hikes.
?Srinivasan Umashankar, Nagpur
Being bossy
Biman Bose, chairman of the ruling Left Front in West Bengal, has committed a serious offence by criticising state Governor Gopalkrishna Gandhi for making a comment on Nandigram. Under Article 159 of the Constitution, the governor has taken an oath to ?preserve, protect and defend the Constitution and the law? whereas the council of ministers headed by the chief minister simply owes allegiance to the Constitution. It?s regrettable that after intimidating the judiciary, Bose, an extra constitutional authority, has jumped on the Governor, too.
?Ajit Sarthi