New Delhi/Calcutta, April 29: India Inc welcomed the Reserve Bank’s slack season credit policy which, it felt, showed a greater commitment to economic revival.
Expressing his views, Anand Mahindra, newly elected president-Confederation of Indian Industry (CII), said, “The 25 basis point reduction in the bank rate and CRR has been in line with the industry’s expectations and was an important step towards aligning Indian interest rates with international rates.” This will release Rs 3,300 crore of additional liquidity in the banking system, he added.
A. C. Muthiah, president of the Federation of Indian Chamber of Commerce and Industry, said: “We welcome the reduction in bank rate and cash reserve ratio (CRR) by 0.25 percentage points. This measure is in line with RBI’s preference for continuation of softer and flexible interest rate environment”.
Rahul Bajaj, chairman and managing director of Bajaj Auto, said “The RBI’s 25 basis point reduction in bank rate and CRR, as well as, deregulation of PLR are steps in the right direction. These measures will stimulate economic growth.”
Assocham president R. K. Somany said, “While the RBI has given special attention to agricultural sector, micro-financing and boosting infrastructure financing, the policy is unlikely to unshackle the economy and generate growth.”
Reacting to the policy, Planning Commission member N. K. Singh said “it is for sustaining growth momentum and it is to sustain the kind of growth manufacturing sector is targeting in future (8-9 per cent).”
Asked if cut in bank rates would not lead to reduction in interest rates on bank deposits thereby hurting the common man, he said, “you will have to take things in totality. Ultimately the common man will gain from investments and he will gain from growth impulse that the RBI’s credit policy is aiming to achieve.”
Vinod Chandiok, president of the Indo-American Chamber of Commerce and Industry said, “The cut in the bank rate and CRR will make the credit cheaper and unlock the impounded funds for development works. Companies in India should be allowed to access funds at international rate of interest to enhance their competitiveness”.
PHDCCI president P. K. Jain said the move reinforced RBI’s commitment to rev up the economy at a time when it was showing signs of recovery.
However, Fieo president Rafeeque Ahmed expressed concern that the policy had no specific concessions for the export sector but welcomed the decision to continue extending refinance facility to eligible export credit remaining outstanding under post-shipment rupee credit beyond 90 days and up to 180 days.
Vikram Thapar, president of Indian Chamber of Commerce said that the cut in bank rate and cash reserve ratio (CRR) by 0.25 percentage signals the continuation of soft and flexible interest rate structure and availability of more credit to the industry.
N. R. Goenka, president of Bharat Chamber of Commerce, said that the thrust and focus of the policy on soft and flexible interest rate regime, adequate availability of liquidity to match investment demand and credit growth, review of the benchmark prime lending rate and the actual prevailing spread, liberalised credit delivery mechanism to the priority sector are well-founded and would help re-align the monetary policy framework in light of the emerging needs of the economy.
Ian Gomes, country managing partner at KPMG, said RBI has emphasised ‘risk-based supervision’ in line with the international good practices.