P Jayarama Bhat, Managing Director and Chief Executive Officer of Karnataka Bank Ltd, has said the fourth bi-monthly monetary policy review by RBI is a very much pragmatic policy with a positive step in the right direction.
He said that acknowledging the abating inflation scenario, lowered growth projections, reduced concern on full monsoon outrun, weaker global environment and lower commodity prices, RBI has resorted to an aggressive cut in repo rate by 50 basis points and took the markets by surprise.
“This highlights the RBI’s concern over the present growth momentum and the confidence on reining in inflation within the comfortable threshold. However, the lowering of growth projections from 7.6 per cent to 7.4 per cent is much more realistic considering the lack of appetite for new investments in private sector and weaning business confidence,” Bhat said.
The front-loaded rate cut by RBI at this juncture, supplemented by administrative reforms from the Government, is expected to rein in the deterioration of asset quality in the banking system and bring back the growth momentum, he said.
Asked if the bank will resort to base rate cut, he said there are other multiple factors also that are to be factored in other than the market rates.
“Our ALCO (asset-liability committee) will be meeting this week itself to discuss and take necessary step. We are committed to our clients and will do our best to pass on the benefits as early as possible,” he added.