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A day after the RBI announced the monetary policy, Uday Kotak, Executive Vice Chairman of Kotak Mahindra Bank expects banks to cut lending rates by next quarter.
“We are evaluating our base rate decision. But I think, for the banking system the rate cut will happen either this quarter or next quarter… Also, normally January to March is a busy period for credit. Bankers will observe and look at cost of funds before revising rates,” Kotak said after a book launch event.
He expects the RBI to cut key policy rate in the range of 75-100 basis points in this calendar year. One basis point is one hundredth of a percentage point.
If inflation reaches somewhere in 5.5 per cent range, then policy rates should be in the range of 7 to 7.5 per cent, Kotak added. At present, the repo rate stands at 7.75 per cent.
Budget Expectations
On the upcoming Union Budget expectations, Kotak highlighted that the government needs to bring more clarity on tax and that the focus must be on investment based growth.
“I think, clarity on the tax policy is important for long term investment as both domestic as well as international investors need to know the rules of the game,” Kotak said.
Adding to that he said, “Investment GDP needs to be kick-started and the key is that India needs to articulate an execution perspective and focus on removal of wastage... Also, a lot of equity is still stuck therefore the investment cycle needs whole new set of new promoters or the government can kick-start by investing through state-owned companies.”
According to him, this Budget is very important as the new government will announce a whole vision for the next five years. “I believe, we will see a more steady development of policy… And I hope it focuses on investment-led GDP and not the consumption-based growth. A statement by the Prime Minister or the Finance Minister on what the government intends to do over the next five years will be watched out for,” Kotak added.
Last month, Kotak announced its tie-up with telecom operator Bharti Airtel to apply for the payment bank licence.
In addition, the mid-sized private lender also bought ING Vysya Bank in an all stock deal, which is likely to get all clearances by March this year.
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