RBI REPO-RATE CUT Views/Quotes from multiple industries on today’s decision by RBI

7 Aug 2019, Mumbai :

Ms. Anagha Deodhar, Economist – ICICI Securities on the RBI Monetary Policy

“The MPC deviated from convention by cutting repo rate by 35bps. In the current situation, 25bps cut would have been inadequate while 50bps cut would have been too aggressive. Inflation and growth are likely to pick up in the second half of FY20 hence we believe there is room to cut rate only once more in this fiscal year. The committee cut growth forecast for FY20 by 10bps to 6.9% however we believe actual growth could be lower. Also, the MPC forecasts inflation to average ~3.3% in FY20 while we believe actual inflation outturns could be much higher at ~3.6-3.7%. Large banks have started cutting lending rates in response to reduced repo rate. Also, the RBI announced a slew of measures to aid the NBFC sector such as reduced risk weights for consumer credit, increasing banks’ exposure to a single NBFC, permitting banks to on-lend through NBFCs etc. Greater transmission of rate cuts along with easier conditions in the NBFC sector are likely to have a position impact on the economy.”

Mr. Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE.

“The Reserve Bank of India’s decision to cut the repo rate by 35 basis points is a welcome move. In a scenario where there is pressure on GDP growth, the move will spur investment and boost consumption activity in the economy. We believe that this announcement might result in a further reduction in home loan rates and will provide an impetus to the government’s initiative of affordable housing. The rate cut coupled with several existing incentives for borrowers will impact home loan rates positively and enhance consumer sentiment”.

Mr. Rajiv Sabharwal, MD and CEO, Tata Capital.

· “RBI reduced the repo rate by 35 bps and continues to maintain an accommodative stance. The markets will draw comfort from the fact that the regulator has emphasised on boosting growth and private investment remains high priority at this juncture.

· Supplemented by durable liquidity and an effective transmission of rates, the bond market will continue to sustain momentum.

· Priority sectors are the engines for the growth of the economy and NBFCs play an important role in delivering credit to these sectors. Thus permitting the banks to on-lend through NBFCs for Agriculture and MSMEs will help further channelize the credit flow effectively to these sectors.”

Mr. Umesh Revankar, MD and CEO – Shriram Transport Finance Ltd.

“We welcome the RBI`s decision of 35bps cut. This rate cut is in line with our expectations in current economic conditions. With a total of 110 bps cut in 2019, we expect the banks to be in a comfortable position to do the transmission of the same.

Permitting Banks to on lend through NBFC for priority sector lending would make this transmission faster and more efficient. This also would significantly improve the MSME functioning in the current environment and ultimately contribute to faster growth of economy. As the monsoon predication is very positive, the overall demand will pick up during Ganesh Chaturthi and would keep the momentum positive through the year”