Bankers have asked a 0.5per cent cut in the cash reserve ratio (CRR) from Reserve bank of India (RBI) to tide over the tight liquidity situation and aid dwindling investments.
Bankers have also asked for a review of the elevated provisioning requirements.
At present, CRR is 4 per cent, after the 25 bps cut in the January policy, while the short-term lending (repo) rate is at 7.5 per cent.
A CRR cut would make monetary transmission faster as a mere repo cut would not help them slash their lending rates due to high cost of deposits.
All leading banks recently increased their term rates to attract deposits, the growth of which has been below the RBI target of 15-16 per cent.