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RBI's Monetary Policy Review: Assocham says demand revival, investment pick up to remain tall order
With the RBI choosing not to reduce the policy interest rates, demand revival in the economy and pick up in the investment cycle would remain a tall order, the Associated Chamber of Commerce and Industry of India (Assocham) said today reacting to the first bi-monthly monetary policy of the apex bank.

India's central bank, the Reserve Bank of India (RBI) in its first bi-monthly monetary policy review today for fiscal year 2015-16 have kept the repo-rate and CRR unchanged. With this the CRR will remain at 7.5 per cent.

RBI has decided to keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL).

Reacting to the RBI's monetray policy review Assocham's president Rana Kapoor said in a statement released to the media. "However, it is quite clear from the policy statement that the RBI is not happy with the banks not transmitting earlier two consecutive reductions in the short-term interest rates by way of slashing the Repo. It is up to the banks now to respond to the nudge given by the RBI."

He said, "The ball is clearly in the court of the banks to rise to the occasion since the credit off-take has remained weak despite front loading of the two rate cuts."

"However, the RBI has taken several note-worthy initiatives which include improving the efficiency of monetary policy transmission by way of encouraging banks to move in a time-bound manner to marginal-cost-of-funds-based determination of their Base Rate and permitting cross holding of bonds for infrastructure and affordable financing," the Assocham president added.

Follow up of the P J Nayak Committee recommendation on Review of Governance of Boards of Banks in India is a welcome move. So also is a move to deepen the financial markets, especially of the government securities, says the industry association Assocham.

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