India Inc disappointed

Sanjeev Sharma

Tribune News Service

New Delhi, August 4

While industry is disappointed that the RBI chose to maintain status quo on interest rates, banks are confident that the stance of the policy is accommodative towards rate cuts in the future.

Jyotsna Suri, president, FICCI said the decision of the Central bank to keep the policy rate unchanged is disappointing for the industry.

“Given that the industrial growth still remains volatile and demand conditions have not seen much improvement, there is a need to give policy stimuli to encourage demand and investments”, she said.

Alok B Shriram, president, PHD Chamber of Commerce and Industry, expressed disappointment on status quo maintained by RBI on repo rate as the pressure of high interest rates is impacting industry and investment environment.

Banks are hopeful that the RBI policy stance offers room for more cuts. Arundhati Bhattacharya, chairman, SBI, said, “RBI’s decision to hold rates was as per market expectations. The good thing is, however, that the RBI forward guidance clearly spells out the possibility of more monetary accommodation. In our view, though such action will be data dependent, there seems to be a bias towards further rate cuts”, she added.

Chanda Kochhar, MD and CEO, ICICI Bank, said, “I expect to see easing of rates over a period of time as further transmission of accommodative monetary policy takes place. Inflation is within the targeted range and should this trend sustain, we could see further policy rate action as well”.

Rates can only go down from the current levels. Rishi Mehra of Deal4loans.com said the RBI is awaiting transmission of its front loaded rate cuts by the banks. He said interest rates on home loans and car loans will not increase from here. The rates for new customers are around 9.75% for home loans.

The real estate sector is worried as demand remains weak. David Walker, managing director of SARE Homes, said the RBI has kept the key rates unchanged, which gives no support to the interest rate sensitive housing market where demand remains weak. He said the banks who have only cut rates by 30 basis points should pass on the full benefit of the 75 basis points cut in rates by the RBI.