The government is likely to continue with its existing policies to ensure economic stability in the forthcoming Union Budget, a top banker said.
"The government has always believed in stable policies. I am sure that this will continue in the coming budget," ICICI Bank's non-executive chairman, K V Kamath, told reporters on the sidelines of a function organised by the Institute of Chartered Accountants of India in Mumbai.
Commenting on the impact of the Cash Reserve Ratio (CRR) hike announced by the Reserve Bank last week, Kamath said the hike in CRR would not have a serious impact on availability of credit or on its pricing.
RBI hiked its cash reserve ratio by 0.75 per cent to 5.75 per cent in its monetary policy review last Friday. The move will be implemented in two stages. The first 0.50 per cent hike will come into effect on February 13 while the balance 0.25 per cent hike will be effective February 27.
The apex bank expects the move to result in a mop-up of Rs 36,000-crore (Rs 360 billion) from the system.
"With inflation stepping up, there was a need to show preparedness. Liquidity is so deep, it should not have any serious impact on the availability or pricing of credit," Kamath said.
Asked on the interest rates scenario, Kamath said, that most banks were committed to hold them.
Banks were approving a larger number of projects and "consumer credit is also coming back," he said, adding that "the country is on a roll and banks are also doing well."
India Inc has also fared well, he said. "Corporate India is clearly on a roll as can be seen from the profitability in Q3 FY 10," he said, adding "I am very bullish about 2010."
Image: Finance Minister Pranab Mukherjee. Photograph: Reuters
