Indo-Asian News Service, New Delhi, Feb 3: Appreciating the Reserve Bank’s decision to hold interest rates in the course of its scheduled policy review Tuesday, India Inc asked the central bank and the government to “nudge” banks to transmit onward benefits of the rate cut made last month.
“Appreciating the fact that RBI Governor Raghuram Rajan would like to wait for the Budget and the GDP data to come before he makes his next move on the policy interest rates, the central bank should really nudge the banks to do effective transmission of the rate cuts which have already taken place,” the Associated Chambers of Commerce of India (Assocham) said in a statement here.
“Excepting a few banks, a large number of them have not been passing the low cost of funds resulting from the previous reductions in the benchmarks,” said Rana Kapoor, Assocham president.
“The banks must be nudged… if not by RBI, at least by the finance ministry, the government being the owners,” he added.
Commenting on the monetary policy statement, Jyotsna Suri, president of the Federation of Indian Chambers of Commerce and Industry (FICCI) said, “Following a cut in the repo rate introduced last month, RBI has today (Tuesday) introduced a cut in the SLR rate by 50 basis points. This is a clear indication to the banking sector to make liquidity and funds available for productive purposes such as investments to spur growth.”
Ajay S. Shriram, president of the Confederation of Indian Industry (CII) said the decision reflects a cautious approach of the RBI while tackling the growth-inflation conundrum.
“CII, however, welcomes the lowering of the statutory liquidity ratio by 50 bps … This, in turn, would provide a fillip to investment and growth,” Shriram said.
International accounting firm KPMG in India partner Shashwat Sharma said, “We appreciate RBI’s watchful approach … The SLR reduction should hopefully propel more growth in the economy.”