The Hindu Business Line : ‘RBI move appropriate’

“The RBI has taken the right decision and this was clear from the positive reaction from both — the stock and bond markets. Liquidity management though will assume priority, but the RBI has acted independently, leaving no major surprises this time,” said the Executive Director of City Union Bank, Mr Kamakodi.

CUB does not foresee any rate cut happening in the near term, either in the PLR or other rates. “The credit off-take can weaken, but the policy review is aimed at maintaining stability in a number of areas,” he said.

The Karur Vysya Bank Chairman, Mr P.T. Kuppuswamy, said the RBI’s response was appropriate and in the interest of the common man. “The RBI has left the rates unchanged because there is a lot of arbitrage opportunity. There are two categories of FIIs — while one has taken a beating due to the US sub-prime crisis and would prefer to keep away, the other would look to invest in India. The inward flow would therefore be moderate. The regulator has, however, indicated that it would intervene anytime to effect a rate cut,” he said adding “we are yet to learn the art of managing huge inflows”.

The Managing Director of Lakshmi Vilas Bank, Mr V.S. Reddy, termed the RBI’s stance as ‘excellent’. “The capital flows will be monitored.”

Asked if LVB would impose a rate cut on home loans, which at present is the highest in the industry (to trigger off-take), he said “no, we are not contemplating any cut. We have intentionally preferred to keep it high. All rates though are negotiated.”

Dr V.A. Joseph, CEO of South Indian Bank, said the regulator has preferred to maintain a status quo in the interest of the masses, to contain inflation.

The Dhanalakshmi Bank Managing Director, Mr P.S. Prasad, said that by keeping the rates unchanged, the RBI has clearly indicated that the regulator was following a methodology ‘best suited for us.’