Prof.
J.D.Agarwal , Director of Indian Institute of Finance
(IIF) has welcomed the RBI’s Midterm Review of the Monetary
and Credit policy for the year 2003-04 announced today. He
has appreciated the focus of the monetary & credit policy
on increasing the efficiency of banks & financial institution
and focusing on improving the quality of service to the corporate
and the common man. The RBI Governor’s concern for appropriate
credit flow to agricultural and SME’s is also appreciated.
The RBI’S Governors projection of a higher GDP growth
rate at 6.5% to 7% with an upward bias and inflation rate
projected to be below 4.5% is realistic and attainable according
to Dr. Agarwal.
According
to Dr.Agarwal, Keeping the bank rate and CRR unchanged at
6% and 4.5% respective are also good steps. Lowering the bank
rate were have adversely affected the interest earnings of
the common man and also the savings rate.
Dr. Agarwal
appreciated various measures of RBI’s Governor particularly
his advise to built up investment fluctuations reserves for
banks, payment of tax refund through electronic clearence
services and standing technical advisory committee on financial
regulations and IBA to advise banks on banchmark PLR.
However
Dr.Agarwal reiterated that RBI’s governor should have
announced more effective measures for appropriate credit flow
to agriculture & SMEs and also reducing PLR to increase
the competitive efficiency of Indian Industry.According to
him, there is no justification for such a wide gap between
existing bank rate & PLR, particularly after the introduction
of computerisation of banking operations.
