The Reserve Bank of India’s has decided to lower the CRR rates by 50 basis points to boost liquidity. The focus has been on keeping policy rates unchanged to monitor inflation and strengthen growth.
This move of RBI indicates the strong focus on growth; inspite of inflation pressures. The expectations are of a 25-basis-point cut in the repo rate at the RBI’s next review on March 15 and a combined 150 bps in cuts by the end of 2012.
The power sector is hugely dependent on government policies on regulations and also on RBI policies on financing; with power projects raising 60%-80% of project capital from banks. This RBI move will surely make power developers plan the year 2012 with expectations in bank rates.
Surely will put a smile on the faces of power plant developers.