Guwahati; April 8: The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday announced various policies and frameworks focused on the Indian payments and transaction ecosystem at the Monetary Policy Committee (MPC) meet on Friday.
The RBI has maintained the status quo around lending rate in line with the expectations of the economists and experts. Various industry experts presented their views and welcomed the new policies of the apex bank.
Mr. Atul Kumar Goel, MD and CEO of Punjab National Bank (PNB) said, “In line with market expectations, RBI Monetary policy Committee kept the repo rate unchanged at 4% and continued with an accommodative stance. Given the current Geopolitical situation the increasing inflation projections and reducing growth outlook was also expected.”
He further added, to impart flexibility in liquidity management, Reserve Bank of India has tweaked its liquidity framework, introducing a standing deposit facility through which it will absorb surplus liquidity.
As the economy is limping back to normalcy RBI restores, LAF corridor to 50 bps as in pre-covid level with SDF as floor at 3.75% and MSF as ceiling at 4.25% which will also provide financial stability. Increasing SLR holding in the Held-to-Maturity category by 100 bps till March 31, 2023 banks will be able to better manage their investment portfolio.
With diversification in the financial industry, the RBI proposal of a panel to review the status of customer service at RBI-regulated entities was a necessary step. Cardless cash withdrawal now being available at all bank branches and ATMs via UPI will help prevent frauds and improve ease of transactions. Rationalisation of risk weights for individual housing loans to be extended till March 31, 2023 which will provide impetus to Housing loan demand”, added Goel.
Mr. Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd stated, “Today’s announcement by the Reserve Bank of India to rationalize the risk weightage on housing loans and link them to loan-to-value (LTV) ratios till March 2023, will boost the nation’s real estate sector.
This announcement will encourage banks to continue lending more to individual homebuyers without feeling the stress on their balance sheets. It will effectively result in higher credit flow to the housing sector and eventually make the residential segment a lucrative investment for aspirational homebuyers.”
Mr. Madan Sabnavis, Chief Economist, Bank of Baroda, said “The credit policy has surprised the markets with aggressive changes in projections for both GDP and inflation. For GDP growth it is 7.2% (Bank of Baroda: 7.4-7.5%) while inflation has been increased to 5.7% (Bank of Baroda: 5.5-6%).
There is a clear hint that the accommodative stance though retained will change as there will be a gradual withdrawal of liquidity keeping in mind the trends in inflation. The interesting introduction of the SDF notwithstanding the high level of bonds held by RBI does indicate that the overnight reverse repo would no longer be attractive as the SDF gives higher return.
These are clear indications of the repo rate being increased during the course of the year and we do expect at least 50 bps increase this year. The markets have already reacted with the 10-year bond going up past 7% and we expect the rate to go up to 7.25% this year.”
