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ReutersReserve Bank of India (RBI)
A slew of measures announced by the Reserve Bank on Wednesday will help expand credit flow and strengthen banks’ balance sheets, bankers said.Commenting on the fourth bi-monthly policy of the RBI, State Bank of India Chairman CS Setty said, “The policy statement was an authoritative one towards unveiling of market reforms and moving beyond the rate actions. The move towards a risk-based deposit insurance premium will facilitate significant improvement in the bottom line of sound banks”.The withdrawal of framework related to specified borrowers and allowing M&A financing by Indian banks are growth accretive and will foster incremental credit flow from banks, he added.Extension of timelines for repatriation from foreign currency accounts of Indian exporters in IFSC and forex outlay for Merchanting Trade Transactions, besides simplification of reconciliation processes in EDPMS/IDPMS portals, are welcome steps, as they will further enhance ease of doing business for the export sector, he noted.”The measures towards enhancing customer satisfaction and protection, improved use of the rupee across cross-border transactions will strengthen the larger financial ecosystem in terms of acceptability and improved currency outlook over the medium term,” he added.Live EventsFurthermore, the focus on expanding the bouquet of services for basic bank savings deposit accounts through mobile and internet services will also have a positive impact on consumers, Indian Overseas Bank MD & CEO Ajay Kumar Srivastava said.Earlier in the day, the RBI expectedly left its key interest rates unchanged as it waited for greater clarity on the impact of US tariffs as well as transmission of earlier rate cuts and recent tax reductions.The six-member monetary policy committee voted unanimously to keep the repurchase rate unchanged at 5.5 per cent and decided to continue with a “neutral” policy stance, giving it flexibility to move in either direction if needed in future.Echoing a similar view, ESAF Small Finance Bank MD and CEO K Paul Thomas said with inflation remaining at a historic low, the space to support growth remains wide, even as inflation trends stay a key monitorable.”The overall message is clear — future policy will be data-driven, and the outlook remains supportive of growth despite global uncertainties…these measures are expected to further boost rural demand and investment activity, creating a favourable environment for sustainable growth,” he said.According to Shriram Finance executive vice chairman Umesh Revankar, “We appreciate RBI’s prudent caution in waiting for the cumulative impact of recent policy actions to play out fully amidst ongoing global and trade-related headwinds. It is heartening that system-level parameters for NBFCs continue to remain sound, with strong capital adequacy and improved asset quality ensuring sectoral stability”.The principle-based framework proposed by the RBI for infrastructure lending is a welcome step, as it clarifies risk weights for operational projects and supports sound, long-term lending practices — enabling NBFCs like ours to further contribute to nation-building, he added.Looking ahead, while global uncertainties — ranging from slower growth to tariff actions — pose challenges, India’s economic fundamentals remain resilient, Tata Capital MD and CEO Rajiv Sabharwal said.This combination of policy stability, improving consumption, and sustained credit demand positions the country well for broad-based, long-term growth, he added.”Meanwhile, the GST reforms are providing fiscal support to boost the economy, giving the RBI more flexibility, and reducing the need to rely solely on monetary easing to boost demand.”Based on current trends, we expect the RBI to hold rates in the upcoming MPC meeting, with the possibility of a cut in the subsequent review,” Grant Thornton Bharat partner Vivek Iyer said.The RBI’s decision to maintain the repo rate at 5.5 per cent reinforces stability in the lending environment, Kotak Mahindra Bank Head-Housing Finance Business Manu Singh said.Add as a Reliable and Trusted News Source Add Now!
While borrowers may not see immediate EMI reductions, the cumulative 100 bps cut earlier this year has already made home loans more affordable, he added.(You can now subscribe to our Economic Times WhatsApp channel)
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