Bankers’ views on RBI Policy

Dinesh Khara, Chairman, SBI:

The MPC decision to hold rates and stance was expected but the set of regulatory decisions holds out a pragmatic and steadfast approach in the quest for digital robustness, customer centricity and price discovery. The decision to have a key fact statement regarding retail and MSME advances will empower customers to make informed decisions. Enhancing the robustness of AePS, authentication of digital transactions through new mechanisms and operational changes in CBDC are all important milestones of systemic resilience and a better future.

A K Goel, Chairman, Indian Banks’ Association (IBA) & MD and CEO of Punjab National Bank

Since our economic growth is impressive and moving in the right track and inflation trajectory is coming down, the status quo on the repo rate and monetary policy stance was on the expected lines. This is largely aided by stable domestic conditions and some degree of “calm” in the global economy. Increase in quarter-wise projections of GDP for FY25 is quite comforting as it indicates higher economic activity which is quite likely to aid demand for bank credit. Inflation numbers of RBI is indicating a downward trajectory which also signals that both monetary policy and fiscal policy measures adopted during FY24 have yielded desired results which is quite positive for the market as well as for policy makers. It also signals that rate reduction in signal rate is possible only if the inflation touches 4.0 per cent and below. Hence there is waiting period for reduction in signal rate.

Zarin Daruwala, Cluster CEO, India and South Asia, Standard Chartered Bank

While the MPC held the repo rate in line with market expectations, what stood out was the upward revision in GDP to a robust 7% for FY25. Contrary to market expectations of RBI pivoting away from its tight monetary stance, it delivered a well-balanced decision that retained its steadfast focus on inflation. Augmentation of the functionality of Central Bank Digital Currency (CBDC) and permitting offline use will encourage broader adoption. The new framework for digital payment authentication together with more stringent due diligence requirements for Aadhar Enabled Payment Systems will help curtail fraud risk.

Shanti Ekambaram, Whole-time Director Kotak Mahindra Bank

The central bank has shown its nimbleness and readiness to tackle the surplus liquidity and reach the long-term objective of inflation at 4% levels on a durable basis. GDP growth is estimated at 7.3% for FY’24 - making it the third consecutive year of > 7% growth. Food remains the major risk element. Next year’s projection of 7% growth also shows the robust growth potential in India, driven by growing physical infrastructure, continued digitization and rising capex besides a steady urban consumption. Fiscal consolidation cues in the Budget and the financial stability of the economy as seen by external and internal indicators are signs that the central bank may much comfort in. The overall domestic economic outlook exudes immense optimism as India continues to remain the bright spot in the world. ”

Harsh Dugar - Executive Director, Federal Bank 

The MPC announcement of maintaining the policy Repo rate, Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) at existing level was on expected lines and also to remain focused on withdrawal of accommodation for inflation targeting. Domestic economic activity remains strong and resilient with agriculture activity holding up, industrial activity gaining momentum and services sector showing robust expansion. This has resulted in pickup in private corporate investment and also aided by government thrust in public sector capital investment and capacity enhancement. This would aid growth in credit demand in the forthcoming years with both increase in level of activity for working capital and term loans for capex funding. Apart from other announcements the introduction of Key Fact Statement (KFS) for MSME borrowers would go a long way in ensuring transparency, simplicity and uniformity.

Alok Singh, Group Head-Treasury, CSB Bank

RBI’s balanced stance on liquidity augurs well for the economy. It’s prudent not to let go of the gains made on inflation; therefore any overhang of surplus needs to be avoided. The inflation projection of 4.5% next year may be conservative and we may see some change in stance post Q2 next year. The RBI will consider easing liquidity first and then will resort to cutting rates if required.

Uttam Tibrewal, Executive Director, AU Small Finance Bank

RBI’s policy was on expected lines with focus on bringing inflation towards targeted range of 4 per cent. Monetary policy stance and steady rates over last one year have helped maintain healthy growth momentum while lowering inflationary pressures. Going forward we believe as inflation nears RBI’s 4 per cent goal, space for monetary easing would open up in the coming quarters, to support lower interest rates and credit demand.

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