Bankers have welcomed the latest round of measures by the Reserve Bank of India and said they will help revive growth, along with the recent stimulus measures by the Centre.
“The RBI policy announcement in response to the fallout of Covid pandemic is timely. Uncertainty associated with the pandemic, normalisation of economic activity, and relaxation made in social distance make it imperative that policy response is calibrated and swift,” said Rajnish Kumar, Chairman, State Bank of India and Indian Banks’ Association.
Support for economy
He further noted that the successive measures by the RBI and government indicate the desire to go full throttle to support the economy in the current unprecedented times.
Shanti Ekambaram, Group President – Consumer Banking, Kotak Mahindra Bank, said there has been a steep fall in consumption demand, combined with supply-side disruptions. “Together, it has led to a sharp decrease in economic growth. … Coming on the heels of the package announced by the Centre, the RBI announcements will help businesses restart. With a gradual lifting of the lockdown, it is now imperative to revive the economy,” she said.
Mandar Pitale, Head Treasury – SBM Bank India, said the accommodative stance by the central bank is a further indication that it will not shy away from changing the interest rates going ahead, depending on the data. “The Monetary Policy Committee opted for a not-so-large 40 basis points rate cut indicating calibrated approach basis underlying uncertainty on inflation outlook,” he said.
Sameer Narang, Chief Economist, Bank of Baroda, noted that since the pandemic, the RBI has reduced policy rate by 115 basis points, and since last year, rates have been lowered by 250 basis points.
“Recent trade and electricity data suggests large contraction due to lockdown and social distancing measures. We expect GDP to contract by 4.7 per cent in 2020-21 and CPI inflation at 3.5 per cent, which makes us believe that RBI has room for another 25 basis points reduction in policy rate,” he said.