SLR reduction: Exporters expect banks to cut interest rates

The Tirupur Exporters' Association on Tuesday expressed  hope that reduction of Statutory Liquidity Ratio by 50 basis points by the RBI would lead to banks increasing lending and also reducing their interest rates.

TEA president, A Shaktivel in a statement welcomed RBI's decision to reduce the SLR by 50 basis points from 22 per cent to 21.50 per cent with effect from the fortnight beginning February 7 and expected banks would increase their lending and also reduce their interest rates to be competitive among the banks.

He was reacting to the sixth Bi-monthly Monetary Policy statement for the year 2014-15 announced by RBI Governor Raghuram Rajan on Tuesday.

Shaktivel said he was anticipating a reduction in repo rate by at least 0.25 per cent in tune with surprise cut made on Jan 15, as inflation has come down and oil prices also coming down significantly.

Banks should come forward to support knitwear exporting units so as to maintain the growth rate and make investment in the facilities, since exports from Tirupur have recorded Rs 15,000 crore (Rs 150 billion) in the first nine months of this fiscal, he said.

Commenting on replacing Export Credit Refinance (ECR) facility with provision of system level liquidity, Sakthivel said with removal of ECR, it should not affect credit to the exporting units, particularly SME units.