‘Policy statement is a nudge to stay nimble and agile in a volatile global environment’

BL Mumbai Bureau September 30, 2022 - Updated 07:25 pm IST

Leading bankers react to the repo rate hike by the RBI

| Photo Credit: SHASHANK PARADE

Dinesh Kumar Khara, Chairman, State Bank of India

The policy statement is a nudge to stay nimble and agile in a volatile global environment. The indication to migrate to expected credit loss regime for provisioning and introducing an alternate framework for securitisation of NPAs are policy options that might provide an impetus for secondary loan market, better price discovery and front loaded provisioning for banks

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

Considering the evolving macro-economic developments domestically and across the globe, the repo hike of 50 bps was expected, and the policy is carefully calibrated with an eye on the evolving challenges. While inflation is a major concern for various countries, domestically, the RBI exudes confidence in managing inflation. The RBI now expects lower crude oil price (Indian basket) from $105 per barrel in the August policy to $100 per barrel in this policy, indicating the concern over high crude oil prices has started softening, which is positive for the Indian economy. Considering the headwinds from geopolitical tensions and tightening of the global financial conditions, there is risk to our external sector, especially exports which is also an engine for domestic economic growth.

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

The decision to raise rates by 50 bps helps manage the growth and inflation dynamic. Faced with heightened economic and geopolitical uncertainty and exceptionally volatile global markets, the RBI’s approach of gradualism is welcome. RBI’s reiteration of its preference for a stable exchange rate and its assurance of adequate liquidity in the face of high inflation, has buoyed the equity and debt markets. 

The proposed enhancements to the securitisation framework and convergence with Global Loan Loss Provisioning Standards will help secure the banking system.

Shanti Lal Jain, MD and CEO of Indian Bank

The calibrated action of a 50 bps increase was needed to pull back headline inflation closer to the RBI tolerance band and keep inflation expectations anchored so as to ensure that growth is sustained. RBI has continued with its pragmatic approach of supporting growth while keeping a check on inflation. This is evident by its decision to remain focused on withdrawal of accommodation. The increase in policy rate will also preserve the forex reserves and put a check on depreciation of rupee.

Murali Ramakrishnan, MD and CEO, South Indian Bank 

The RBI’s monetary policy is well-timed and calibrated, to buffer the current challenges of turmoil in global financial markets. The 50 bps revision is much needed to rope in the concern of inflation. The Indian economy has remained resilient in spite of global headwinds in an environment where recessionary fears are mounting and inflation is high. Projected growth, though revised, will be understandably muted given global economic factors. However, domestic growth will continue to show a positive trend and will pick up in FY24.

Ashu Khullar, CEO, Citi India

The 50 bps rate hike is an appropriate measure to buttress India’s macro stability against a difficult global environment. While India cannot ignore the global headwinds, the country is certainly demonstrating more resilience than other markets – both emerging and developed. Timely and calibrated intervention of policymakers helps boost investor and corporate confidence.

Shanti Ekambaram, Wholetime Director – Designate and Group President, Kotak Mahindra Bank

Indian macroeconomic metrics and growth continued to be resilient amidst volatility in the global economic and financial markets due to aggressive tightening by global central banks. Private consumption and investment demand in India continued to be strong, service exports are at an all-time high and capacity utilisation in the manufacturing sector has been increasing. Overall, RBI will continue a calibrated strategy of ensuring price and financial stability while supporting growth. While the central bank will go by emerging data on inflation and growth, we expect further rate hikes.

Venkatraman Venkateswaran, Group President and CFO, Federal Bank

RBI is confident of India’s growth trajectory even as it acknowledged risks from global events. It is also taking steps to address the liquidity deficit, which is believed to be temporary. Government spending is expected to pick-up further in H2FY23, which will aid in maintaining liquidity. The policy is a balance between inflation control and supporting growth.

Surojit Shome, MD and CEO, DBS Bank India

Given the prevailing inflationary headwinds and geopolitical uncertainty, RBI’s continued withdrawal of their accommodative stance and a 50 bps hike is a necessary step to contain inflation and manage emerging macro risks. While the Indian economy has shown resilience compared to other major global economies, a cautious monetary policy is expected to address the risks of rising instability in the global economic and financial environment.

Sidharth Rath, MD and CEO, SBM Bank India

RBI delivered a 50 bps hike, highlighting the fact that the present aggressive policy actions and communication from advanced economies are creating negative ripples globally in closely integrated global financial ecosystem. The Governor’s remark on the present policy rate still “trailing inflation-adjusted rate” levels in 2019, when the policy had moved from neutral to accommodative stance, hints that there is a space for another small hike if warranted, basis the evolving macro-economic conditions and domestic data.

Published on September 30, 2022 13:55
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