Mumbai, Dec 7 (PTI) With severe liquidity crunch continuing to persist, the central bank is unlikely to hike rates further when it undertakes the mid-quarter review on December 16, HDFC Group chairman Deepak Parekh said today.
"I don''t think they (Reserve Bank) will tighten (the interest regime). There is so much shortage of liquidity in the system ... I don''t think they can increase interest rates further (at this juncture)," Parekh told reporters after being awarded Chevalier de l''ordre de Legion d Honneur'' (Knight in the order of the legion of honour) by the French government here.
Liquidity, which was in abundance has disappeared following the continuous tightening measures by RBI in its effort to contain the mounting inflationary pressures in the system, Parekh said adding, "Today banks are borrowing large sums of money on a daily basis ranging from Rs 70,000 crore to Rs 1 lakh crore."
Since mid-October, RBI has repeated opening a second liquidity window (liquidity adjustment facility or LAF) under which it has been allowing banks to borrow twice a day from the central bank.
Since the beginning of this year, RBI had brought back the interest and key policy rates to the pre-crisis levels by six successive interventions since the beginning of this year.
That apart, the apex bank has also brought down the SLR (statutory liquidity ratio, which is the mandatory amount of funds banks have to maintain with themselves to meet prudential norms) by 100 basis points to 24 per cent as a temporary measure to keep the system liquid.
The lower SLR facility is now open up to January 15.
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