New Delhi, 6 June (IANS). The top bankers on Friday appreciated the Reserve Bank’s decision to reduce the repo rate from 0.50 percent to 5.50 percent and the Cash Reserve Bank’s decision in four installments in four installments.
Bankers say that RBI’s policy move is expected to give necessary incentives for loan expansion in priority sectors, which will promote financial inclusion.
In addition, the estimate of retail inflation for FY 2025-26 has been revised to 3.7 percent, which is in line with the RBI’s four percent target. This amendment shows the confidence of the central bank’s control over inflation.
Ajay Kumar Srivastava, MD and CEO of Indian Overseas Bank, said, “CRR’s decision is expected to release Rs 2.5 lakh crore in primary liquidity, which will make the loan position easier in the banking system. This overall policy shows a well-known and discourse evidence with estimates of 6.5 percent of GDP in FY 2025-26 and estimates of steady quarter trends.”
The rise in non-latest imports and a 14 percent increase in gross FDI is also a sign of strong domestic demand and the confidence of global investors in the country’s structural strength.
Bankers said that these steps will ensure resurrection in domestic demand, which is operating under the leadership of private expenses.
Vinod Francis, general manager and chief financial officer of South Indian Bank, said, “The main learning from the policy is that the central bank is leaving no stone unturned to ensure ‘stability in inflation’. At the same time, it is making every effort to support development.”
He said that due to tariff uncertainty, demand (exports) coming from abroad are adversely affecting. In such a situation, the RBI’s focus on supporting domestic demand and increasing the capacity of banking the banking sector strengthens the bank’s policy path.
The Monetary Policy Committee (MPC) has surprised the markets with a large and shocking decision. This clearly comes from the point of view of taking further action to support development, in which the effects of transmission are taken into consideration.
According to SBI Mutual Fund fixed income CIO Rajiv Radhakrishna, “Adopting RBI’s neutral stance means that policy rates may stabilize at 5.50 percent in the current cycle. However, it will remain a dynamic target, as the older data points are likely to shape the results.”
Yes Bank’s Chief Economist Indranil Paan said that RBI is now focusing on transmission mechanism, which has initially slowed down and still not visible for credit markets.
CRR cuts will ensure a decrease in the cost of funds for banking systems, ensuring transmission of 100 BPS repo rate.
Paan said, “Moving forward, we still feel that the final 25 basis points (0.25 percent) are likely to be cut, but its time is uncertain.”
-IANS
SKT/Ekde
