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    RBI Likely To Cut Repo Rate In December’s Policy Meeting, Says SBI MD; Here’s Why

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    By Priya Raghuvanshi

    Copyright timesnownews

    RBI Likely To Cut Repo Rate In December's Policy Meeting, Says SBI MD; Here's Why

    The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) decided to keep policy rates unchanged, a move anticipated by the market. Vinay M Tonse, Managing Director at State Bank of India (SBI), said in a conversation with ET Now that this pause allows banks to realign operations without extra pressure on margins. Tonse explained that interest rate transmission has largely been effective within the banking system. “On the asset side, the adjustment happens almost instantly. On the deposit side, we have limitations, but since February, we have seen more than 106 basis points transmission on fresh deposits and about 22 basis points on overall deposits,” he said, as per the report. Rate Cut Expected In December SBI anticipates the terminal repo rate will settle at 5.25 per cent, with a potential rate cut coming in December. Tonse commented, “Our house view is that the cut may come in the next MPC. The pause at this stage makes sense, given that growth and inflation remain stable.” He also noted that the traditional busy season appears to have started earlier this year, partly driven by recent GST rate reductions. “We are seeing uniform traction across segments, though I cannot share specifics as SBI has entered the silent period post-Q2. This is a classical play-out of the business season, just a little earlier than usual,” Tonse added. Preparing For New Credit And Risk Management Frameworks Responding to RBI’s glide path for the Expected Credit Loss (ECL) framework through FY31, Tonse affirmed that SBI is well-prepared. “We have already factored in the impact on our growth and asset book. The realignment will happen automatically. We are mentally prepared for implementation,” he stated. Tonse also welcomed RBI’s recent move to facilitate financing for acquisitions, which he believes will enhance credit flows. “There is no supply-side issue today; the challenge is demand. With corporates holding significant cash, the move will support credit growth, particularly for listed companies under the new guidelines,” he said. On RBI’s proposal for risk-based deposit insurance premiums, Tonse expressed strong approval, noting, “Risk pricing happens everywhere else, so why not here? SBI will definitely gain from this shift.”

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