Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 3.5
Article rating: 5.0
Article rating: No rating
Article rating: 4.0
Article rating: No rating
Article rating: No rating
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: 5.0


India Inc hails RBI’s ’neutral’, futuristic moves

Author: IANS/Thursday, June 7, 2018/Categories: Regulatory

India Inc hails RBI’s ’neutral’, futuristic moves

New Delhi - India Inc on Wednesday welcomed the "neutral" stance taken by the Reserve Bank of India (RBI) on a future rate hike trajectory, along with its reform measures for the realty, bond and banking sectors.

The positive feedback came even as the RBI raised its key interest rate for the first time since January 2015. It hiked the repo rate by 25 basis points (bps) to 6.25%.

Commenting on the monetary policy statement, FICCI President Rashesh Shah said: "Today's 25 basis points rise in repo rate by RBI is based on the ground realities and it indicates the positive sentiments in the economy."

"Recovery in Indian economy that has come on the back of structural reforms like GST, Bankruptcy Code and RERA is firming up, and investments have started to see an uptick; RBI stance would boost the animal spirits and confidence of businesses." 

Besides, Shah said the improvement in growth seen lately needs to be supported to ensure "a firm turnaround of economy with capability of sustained high growth".

"The manageable inflation situation and optimism in the economy is set to continue going ahead and the GDP growth rate in the current financial year would be around 7.5%," he added.

Confederation of Indian Industry (CII) President Rakesh Bharti Mittal while noting the increase in interest rate said that "the forecast of monsoon is very healthy and as it pans out, the little pressure that is there on food prices would ease and that should encourage RBI to revert to their benign stance on interest rates".

In contrast, another major industry chamber -- Assocham -- said the RBI's decision to hike repo rate has disappointed borrowers.

"The RBI policy document highlights the macro risks to the economy, including uncertainty on the crude oil front and the impact of the revision in the MSP for farm products, pressure for which would only increase in the election year," Assocham Director General D.S. Rawat said.

"In fact, while the borrowers would feel disappointed, the RBI can't be faulted as its basic mandate as given by Parliament is to keep inflation under control."

According to ICICI Bank MD and CEO Chanda Kochhar, the hike in policy rate has reaffirmed RBI's credibility as a vigilant central bank, especially against the backdrop of heightened global uncertainties.

"Such timely action will ensure that inflation expectations remain anchored, thereby aiding financial stability," Kochhar said.

"Moreover, convergence in definition of the priority sector limit for housing loans with that of the government's affordable housing scheme will ensure that this segment receives a fillip."

Another top banker, SBI Chairman Rajnish Kumar said: "The RBI decision to raise repo rate by 25 bps is a pre-emptive and welcome move. Simultaneously, the decision to keep the stance in neutral mode indicates RBI's willingness to be flexible and accommodative."

"On the development front, the bouquet of measures are positive. In particular, the increase in FALLCR (Facility to Avail Liquidity for Liquidity Coverage Ratio) will provide more liquidity to banks and moderate short end interest rates," Kumar said.

Other measures like increase in threshold limits for affordable housing, encouraging continued formalization of MSME sector are in the right direction, he added.

Indian Overseas Bank's MD and CEO R. Subramaniakumar said: "The policy with neutral stance and the narratives are towards strengthening the fundamentals, especially the inflation."

Economic revival on a sound footing and increased capacity utilisation are reassuring statements, which will spruce up investments, Subramaniakumar said.

"Recognising the MSME sector strain and extending the relief of 180 days for asset classification is a very positive and forward-looking step. Banks may have some relief as well," he said.

Print Rate this article:
No rating

Number of views (382)/Comments (0)

rajyashree guha


Other posts by IANS
Contact author

Leave a comment

Add comment



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



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