The RBI may have chosen to maintain status quo on rates, but bankers and analysts are of the view that the slew of measures announced on Thursday will help improve liquidity.

“The RBI policy is a statement of intent carefully using a repository of policy novelties to address the current delicate balance of growth and inflation. While the decision to keep rates on hold was universally anticipated, the RBI’s bouquet of developmental and regulatory steps is a positive surprise to the financial ecosystem,” said Rajnish Kumar, Chairman of State Bank of India and Indian Banks’ Association.

Noting that the RBI is quite progressive and forward looking, AK Das, Managing Director and CEO, Bank of India, said: “Notwithstanding unchanged policy rates, the introduction of term repo opens up ways to transmit the signal rate changes. Measures such as DCCO extension for realty, MSME window expansion for restructuring and CRR exemption for incremental funding to key segments are growth-oriented, and promise to provide the much-needed impetus to lending.”

Chandra Shekhar Ghosh, Managing Director and CEO, Bandhan Bank, said after the Budget, the monetary policy also aims to provide impetus to the economy and the industry.

“The announcement of incentivising of bank credit to certain sectors is encouraging. The projection of rural incomes increasing in future is in line with Bandhan Bank’s experience in these markets,” he noted.

Zarin Daruwala, CEO, India, Standard Chartered Bank, also said that the Monetary Policy Committee has delivered a strong pro-growth policy in the face of sluggish growth and high inflation. “While keeping rates on hold, it announced targeted measures such as CRR leeway for fresh retail and MSME loans. The MPC has also left the door open for further rate cuts. These measures will provide a fillip to credit delivery and also aid monetary transmission,” she said.

Experts said the next round of rate cuts by the RBI will depend on the inflation trajectory.

“Going forward we expect the MPC to react to an evolving growth-inflation situation. While the base case is still for a pause, the probability of one cut cannot be ruled out sometime in the second half of the calendar year when inflation is likely to fall towards four per cent,” said B Prasanna, Head, Global Markets, Sales, Trading and Research, ICICI Bank.

“Inflation is likely to trend at a level higher than the RBI’s four per cent to 4.5 per cent target this quarter. Against this backdrop, the RBI is likely to maintain status quo on rates as well as its monetary policy stance. They are likely to continue an accommodative stance to support growth,” said Shanti Ekambaram, President, Consumer Banking, Kotak Mahindra Bank.

“The RBI policy has been very positive overall. The decision to keep the repo rate unchanged, along with maintenance of accommodative stance, is on expected lines. The decision to provide benefit under CRR to housing, car and MSME loans is credit positive. Keeping restructuring window open till Dec 20 will be advantageous for MSME borrowers who are genuinely stressed. Medium enterprises borrowers will also be benefitted by moderating interest rates through linking of external benchmark,” said SS Mallikarjuna Rao, MD and CEO, PNB.

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