Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: 5.0
Article rating: 5.0
Article rating: 5.0
Article rating: 5.0
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.0
Article rating: 5.0
Article rating: 3.3
Article rating: 5.0
Article rating: 4.0
Article rating: No rating
RSS

News

India Inc, investors disappointed with RBI’s status quo on lending rates

Author: IANS/Thursday, December 7, 2017/Categories: Economy

India Inc, investors disappointed with RBI’s status quo on lending rates

New Delhi/Mumbai, Dec 6 - India Inc and investors on December 6 expressed their disappointment over the Reserve Bank of India's (RBI) decision to maintain the status quo on key lending rates during its fifth monetary policy review of 2017-18.

"Ficci is disappointed with the RBI's decision to hold on to the policy rate at the current level. A downward revision would have boosted sentiment and supported the growth momentum that we are seeing building up following the second quarter GDP numbers," said Ficci's President Pankaj Patel.

"The initial signs of a turnaround in the economy need all support to translate into a solid recovery that is critical from a jobs perspective. A cut in the policy rate with some more targeted intervention in the form of easing conditions for extending housing loans would have provided the needed stimulus and complemented government's own efforts to lend strength to the economic recovery process."

Industry body CII said that reduction in interest rates would give the necessary signal that fiscal and monetary policy are working in consonance to give a boost to growth.

"We are hopeful that going forward the RBI would shift its policy stance from neutral to accommodative and effect a cut in interest rates to revive domestic demand which would provide a fillip to broad-based investment activity which has yet to take off in a big way," said CII's Director General Chandrajit Banerjee. 

According to Assocham, , while inflation weighed on the RBI's decision, growth concerns "cannot be brushed aside" either, as the cost of capital is still high in India.

"India Inc continues to remain over-leveraged while the consumer demand is still subdued. Benign interest rates are solutions to both these issues. As for inflation, the RBI has genuine concerns but the message must be picked up by the government to fix the supply side, especially in the items of common use," Assocham's President Sandeep Jajodia was quoted as saying in a statement.

"The need of the hour is to attend to inefficiencies in the entire value chain in the farm sector so that both producers and consumers get a fair deal without impacting inflation. As for revival of growth, besides the interest rates, the tight liquidity situation should also be monitored. It must be ensured that when the growth stimulus picks up, adequate credit be made available to the industry, trade and consumer."

Commenting on the outcome of the fifth monetary policy review, Chanda Kochhar, MD and CEO, ICICI Bank said: "The RBI's decision to keep the policy rate unchanged today is in line with expectations. It has displayed prudence in highlighting adverse risks to the inflation trajectory. It has also taken cognizance of further improvement in growth prospects on account of various structural reforms implemented by the government including bank recapitalisation."

"It is heartening to note that the RBI has also communicated greater clarity on the liquidity framework indicating that it is ready to deploy both short term and durable tools to absorb or inject liquidity as the need arises," Kochhar said.

Banking major State Bank of India's (SBI) Chairman Rajnish Kumar said: "The RBI decision to maintain status quo was in consonance with market expectations." 

"The policy assessment is fairly balanced and pragmatic with inflation and growth both expected to show an uptick in next two quarters. The decision in allowing subsidiaries of Indian banks abroad to refinance AAA rated corporates will provide a fair and just opportunity to Indian banks to book and retain good quality assets," Kumar added.

Even the country's stock exchanges extended their losses after the RBI's decision. 

On a closing basis, the wider Nifty50 of the National Stock Exchange (NSE) fell by 74.15 points or 0.73% to 10,044.10 points.

The barometer 30-scrip Sensitive Index (Sensex) of the BSE closed at 32,597.18 points -- down 205.26 points or 0.63% -- from its previous close.

On sector-specific basis, rate-sensitive stocks like banking, metals and capital goods were the hardest hit with the Nifty Bank index down 1.09%.

Print Rate this article:
No rating

Number of views (181)/Comments (0)

Kavita Giridhar Mallya

IANS

Other posts by IANS
Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free