Industry chamber CII on Tuesday said there is more scope of monetary action to further ease liquidity and help banks to cut interest rates.
"I am sure they (RBI) are prepared to take that (monetary action). There is further scope for a 2.5 percentage point cut in the CRR itself and, if the situation warrants, a cut in the SLR also," CII President ICICI Bank CEO and MD KV Kamath told reporters in New Delhi.
When asked when private sector banks will cut lending rates, Kamath said rate cuts are a subject of demand and supply and banks will like to see enough liquidity before repricing credit.
While many public sector banks have cut their benchmark lending rates by 75 basis points, private sector banks, including ICICI Bank, have not done so.
Kamath said first borrowing is repriced before repricing credit and it will take a little time.
"So far liquidity was held back as a conservative measure. We are easing that. To that extent it is a significant difference from what has been happening in the West".
"There is no foreign currency crisis in India," he said, adding it is "in our hands to determine how much we need to ease".
"We have large inflows in terms of NRI remittances. If we increase the rate of interest on these savings we get all the money in India," Kamath added.
The CII President said his assessment is that liquidity has to be appropriate in the system and so has to be the price of credit.