New Delhi: Favouring a softer interest rate bias, Reserve Bank of India (RBI) on May 27 said that the Centre's borrowing programme of over Rs 1,42,000 crore would sail through without putting pressure on the bank rate.

"I don't expect too much trouble in the government's borrowing programme. We will do whatever is necessary which will be conducive for growth," RBI governor Bimal Jalan said after a meeting with Finance Minister Yashwant Sinha.

He allayed fears that high borrowing would put pressure on interest rate. Centre's borrowing is targeted at Rs 1,42,279 crore which is Rs 10,000 crore more than the previous fiscal's borrowing.

The Centre has mopped up a little over Rs 35,000 crore till middle of May.

Asked if RBI would continue with the softer interest rate regime, Jalan said, "yes, of course".

The RBI's credit policy statement indicated that the bank rate, the rate at which RBI lends funds to banks, would be reduced by 0.5 per cent from 6.5 per cent prevailing now.

Jalan said the Central Bank was keeping a close watch on the liquidity situation, days before the proposed cut in cash reserve ratio (CRR) of banks.

RBI had advanced the date of the 0.5 per cent cut in CRR to June 1 from June 15.

It is expected that cut in CRR would pump in more than Rs 6,000 crore into the banking system.

PTI