According to Mahindra & Mahindra executive director (finance) Bharat Doshi, it is a stable, cautious policy which helps exporters on procedural matters but belies their expectations on any signal for rupee depreciation. He feels that while the policy provides for flexibility in PLR between banks and borrowers, what it does not address is the hesitation by bankers to lend to small and medium scale units. Petronet vice-president (finance) Siddharth Kapoor feels that though the CRR cut will no doubt infuse more funds intothe system, what is interesting is the attempt to remove the impediment in lending and bring more flexibility into the banking system. For instance, allowing banks to determine their own PLRs, especially different PLR's for different tenures.

Another move that is excellent for infrastructure projects is the fixed-rate loans, which has eliminated interest rate risk on projects. He, however, feels that the RBI's operational guidelines on infrastructure lending may not help so much. The issue today really is that many bank do not have the ability to accurately appraise infrastructure project. That is the capability that they need to develop. The lack of RBI guidelines was not really the constraining factor. Kapoor hopes that the CRR cut will lead smaller banks to cut their rates in line with the larger banks.

HCC head of finance Pravin Sood says the best thing in this credit policy is the flexibility given to banks to fix their own PLR. The fixed interest rate on long term funds will help infrastructureprojects, but the cost of funds will be higher. In the last two years, interest rates have been dropping, so corporates may not like to tie themselves up to a long term rate.

The guidelines issued to banks and financial institutions will make it easier for infrastructure projects to access funds, but the issue of appraisal capability remains. Cipla director Amar Lulla feels that overall the credit policy appears to be rather positive though industry expectations on export credit interest have not been met. Freedom granted to banks to operate different PLRs for different maturities is a progressive move. Others in the corporate sector were less enthusiastic. National Organic Chemical Industries (Nocil) Executive Director (finance) VR Gupte feels that the policy has no major benefits for the corporates that can be welcomed.

The CRR cut will definitely make banks flush with funds but the amount of disbursals that will take place to corporates is questionable. Banks, being more cautious againstnon-performing assets, are choosy about disbursing loans.

This has caused a slight tight-money situation for most corporates. Since interest rates have not been revised downwards, Gupte feels that there is no reason to feel good about the credit policy. Marico Industries chief financial officer Milind Sarwate agrees. According to him, barring the CRR cut, all the other changes are general. However, even the CRR cut is not going to have a major impact given that liquidity is not the issue but the recession is.Lupin Laboratories senior vice-president (finance) Sunil Makharia feels that the reduction in the CRR, though expected, will not have much impact as there is already sufficient liquidity in the system. However, from the banks point of view, it can have a marginal positive impact on their profitability.

As regards export credits, the present policy has belied industry's hopes. It was expected that interest on export credits will be reverted to nine per cent from the existing 10 per cent. However,different PLRs for different maturities and fixed rate loans for project finance are a welcome move, he says. Videocon group consultant SK Shelgikar said the economic relevance of the credit policy is getting reduced by the day, like the budget document which only impacts the macro and not micro issues. Thus the capacity of the policy to impact banks and corporates is getting marginalised. Shelgikar feels that the RBI's announcement to free banks to offer interest rates on deposits of any maturity above 15 days will have a positive impact with growing competition among banks.