Room for further easing of rates: bankers

As RBI’s policy was on expected lines, bankers hinted that further liquidity support and low inflationary expectations will provide more room for easing of interest rates

Arundhati Bhattacharya, CMD, State Bank of India : RBI policy was in line with market expectations of status quo. The SLR cut is expected to provide growth supportive liquidity of about ₹45,000 crore. The flexibility regarding the DCCO (date of commencement of commercial operations) will enthuse companies with strong balance sheets to consider taking over stuck projects. With inflationary expectations at a 21-quarter low and coupled with a benign global environment, we are in the early phase of a prolonged rate easing cycle.

Chanda Kochhar, MD & CEO, ICICI Bank : Several regulatory measures in the policy are welcome. These include measures to enhance the ability of bankers to protect their interests as well as maximise the value of assets created in the economy. The introduction of differential rate structures for non-callable deposits will help banks in asset-liability management.

VR Iyer, CMD, Bank of India : The policy was along expected lines with regard to status quo in policy rates. Further moves depend on fiscal consolidation and evolution of global and domestic developments. Primarily the GDP numbers expected on February 9, inflation numbers and fiscal roadmap to be laid down by the Government in the next Budget will form the basis for the next move on rate cut.

Rana Kapoor, MD & CEO, YES Bank and President, Assocham : The RBI has stayed pat but at the same time, remained dovish in its assessment and guidance. It has commissioned a 50 bps cut in SLR, which will enhance banks’ headroom to increase lending to productive sectors as growth picks up. Further, regulatory measures allowing flexibility in extension of DCCO of projects where a change of ownership takes place and the extension of the dispensation to NPAs with respect to reversing the excess provision on sale of NPAs to securitisation/reconstruction companies, should help to expedite implementation of delayed projects.

The central bank will have the opportunity to cut repo by another 175 bps during the course of FY16.

Mihir Vora, Director and Chief Investment Officer, Max Life Insurance : The RBI non-action on rates in this meeting was on expected lines. We believe that further action by the RBI should only be expected after the Budget. The path the Finance Minister takes towards fiscal improvement will be an important variable in the RBI’s view formation. We continue to expect a further 75 basis points rate cut during financial year ending March 2016.

George Alexander Muthoot, MD, Muthoot Finance : We welcome the RBI’s announcement of doubling the overseas remittance limit from $125,000 to $250,000 per person per year, thus facilitating Indians with improved liquidity to acquire and hold shares, debt instruments or other assets outside India without prior approval of the RBI.

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