The RBI MPC unanimously decided to keep the repo rate unchanged at 6.5 per cent with preparedness to act should the situation warrant. Meanwhile, the inflation forecast was revised upwards to 5.4 per cent from 5.1 per cent, earlier on the back of rising vegetable, cereal and pulse prices in August. While projecting the real GDP growth rate at 6.5 per cent for FY24.
The Bankers believe that it is a balanced policy and they expect the pause to be for some time unless data shows a different trend.They also highlighted that the MPC measures over the last few quarters have been effective in maintaining a tight leash on headline inflation while facilitating economic growth.
Here’s what top bankers said about the RBI’s policy decisions:
Mr. Dinesh Khara, Chairman, SBI:
“The ability of RBI to remain steadfast and focused on pitching key growth deliverables, bodes well even as global uncertainties pick pace outside. The inclusion of PM Vishwakarma scheme in PIDF will enhance market breadth and depth benefitting small scale artisans. The IRAC norms proposed for key infrastructure projects could rekindle incremental investment appetite. The strengthening of Ombudsman Scheme will further promote the interest of customers. The decision to calibrate liquidity will depend much on evolving scenario.”
Mr. Pralay Mondal, MD & CEO, CSB Bank.
“The Status quo considering the volatility in Global factors is a prudent call. The growth projection of 6.6% along with incremental higher credit growth will keep pressure on banks for deposits. We hope prudent balance in OMO sales will keep the system liquidity adequate to keep the short term rates down. Overall close watch on inflation and other high frequency data will remain important.”
Virat Diwanji, Group President and Head – Consumer Bank, Kotak Mahindra Bank
“Though the decision to hold the policy rates was in line with the broader expectations, the commentary by the Governor has left several clues into the emerging scenarios, including the increasing inflationary pressures in the system, both internal and external, and the increasing inclination to suck out additional liquidity. However, the GDP growth forecast for FY24 at 6.5% is comforting, backed by robust domestic economic activity and strong consumption. A nascent revival in rural growth is most welcome as it will add to the resilience of the overall economy. As RBI continues to monitor price and financial stability, it may also have to keep a watch on Bond yields, equity markets, and the US dollar too.”
Venkatraman Venkateswaran – Group President & Chief Financial Officer at Federal Bank
“The RBI Monetary Policy Committee (MPC) has decided to maintain the status quo on the Repo rate, aligning with expectations. Considering that the transmission of the rate hikes hasn’t been fully passed on, it was a prudent decision to adopt a wait-and-watch approach. Inflation management remains a focal point for the central bank, with a clear indication that the MPC will intervene if necessary to prevent any spillover effect from food or oil price inflation.
Given the broad-based credit growth and the relatively favourable state of the Indian economy compared to the global economy, banks will continue to pursue retail deposits.”
