Bankers believe the recent RBI rate cut leaves room for further monetary easing. This move aims to strengthen India’s GDP growth over the longer term. The decision provides a buffer against potential economic shocks.
C S Setty, Chairman of SBI and IBA, highlighted the policy’s balanced approach. He stated that cutting rates while keeping future options open helps the economy. It guards against unexpected external headwinds.
Setty added that the rate cut, neutral stance, and liquidity interventions work together. They aim to sustain current economic momentum. Simultaneously, they safeguard price and financial stability.
The overall policy delivered a clear and confident message. It signals the Indian economy remains on strong footing. Robust growth is accompanied by comfortably low inflation.
Banks have faced a challenging year due to previous RBI rate cuts. Their net interest margins have narrowed, impacting core incomes. Yet, lower lending rates could spur more borrowing.
Higher loan volumes might help banks offset some losses. This argument suggests a potential silver lining for the sector.
Ajay Kumar Srivastava of Indian Overseas Bank said the policy supports growth. The rate cut is expected to ease borrowing costs across the board. This should spur demand in key sectors.
He specifically mentioned housing, real estate, and MSMEs. The move is also seen sustaining personal and auto loan growth. It’s a broad-based stimulus.
The IOB head welcomed another RBI initiative. A two-month drive to address pending ombudsman complaints begins January 1. This will strengthen customer service across banking.
Foreign lenders also expressed support. Standard Chartered’s P D Singh noted the cut is backed by confidence. Confidence exists around economic growth and controlled inflation.
Singh highlighted significant liquidity measures. These include G-sec OMO purchases and forex swaps worth Rs 1.45 lakh crore. Combined with recent GST cuts, they augur well for future activity.
In the non-banking sector, LIC Housing Finance’s Tribhuwan Adhikari sees relief. The RBI move will provide further relief to homebuyers. The company anticipates positive growth in affordable and mid-segment housing.
Rajiv Anand of IndusInd Bank pointed to the space created for easing. CPI inflation has slipped to a record low. A generalised decline across key constituents supported this decision.
SVC Bank’s Ravinder Singh focused on the opportunity created. The rate cut and liquidity infusions are key. They make cheaper credit a real possibility for borrowers.
The door remains open for more easing from the RBI. Bankers see this as a strategic move to bolster the economy. Future actions will depend on evolving data.
This policy approach balances immediate stimulus with long-term stability. It aims to nurture growth while keeping inflation in check. The banking sector adapts to this new landscape.