Summary of this article
RBI holds rates steady, signals cautious stance amid global risks
Regulatory easing on capital norms expected to support credit growth
Measures to boost MSME liquidity and strengthen banking sector resilience
Bankers termed the Reserve Bank's move to hold rates in its policy review on Wednesday as a prudent and well-calibrated measure.
Sector-specific moves like the removal of the Investment Fluctuation Reserve requirement and easing of CRAR (capital and risk-adjusted ratio) computation were also welcomed by bankers.
The RBI's decision to maintain a status quo stance amid ongoing global uncertainties reflects a prudent and well-calibrated approach aligned with market expectations," CS Setty, who chairs the largest lender SBI and also industry grouping IBA, said in a statement.
Setty said the regulatory moves will help strengthen banks' capital positions and help support credit growth on a sustained basis.
Indian Overseas Bank's managing director and chief executive, Ajay Kumar Srivastava, said the status quo reflects a 'safety first' approach wherein the central bank is prioritising macroeconomic stability.
"A cautious stance is warranted amid evolving global uncertainties, particularly geopolitical tensions in West Asia and volatility in crude oil prices," he said.
The removal of due diligence requirements for onboarding onto the TReDS platform is a progressive step that will significantly enhance liquidity access and working capital efficiency for small businesses, he said.
AU Small Finance's founder, managing director and chief executive Sanjay Agrawal said the decision to hold rates is a pragmatic one, which signals that the economy has resilience.
"Market has digested the RBI's caution about upside risks to inflation and downside risk to growth over the baseline scenario due to rise in input costs, following supply chain disruption relating to crude oil, gas and other commodities," he said.
Standard Chartered Bank's chief executive for the country and South Asia, P D Singh, said the potential risks from the West Asia crisis resulted in the status quo in rates.
"The measures to enhance capital metrics through review of the incremental provisions on non-performing assets and the investment fluctuation reserve, improving ease of trade business for MSMEs and development of the term money market continue the structural business-friendly measures announced by RBI," Singh said.
Among the non-banks, Muthoot Finance's managing director, George Alexander Muthoot, said the policy reinforces confidence in India's economic fundamentals, and added that he expects credit demand to remain resilient in the near term as growth momentum sustains.
