NE BUSINESS BUREAU
MUMBAI/NEW DELHI, APR 7
The Reserve Bank of India’s decision to keep repo rate unchanged for the fifth time in a row is in line with the economic need to encourage growth, financial market players, realtors and experts said on Wednesday.
In its first monetary policy announcement for this fiscal, the Reserve Bank underlined the need to support the economy given the current situation amidst resurgence of COVID cases in the country.
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Harsh Vardhan Patodia , President, CREDAI National, said: “Containing fresh infections and boosting vaccinations are the two important steps to counter the socio-economic fallout of the pandemic. The pace of vaccination drive must be increased many folds and should cover younger population too. By keeping the repo rates unchanged, RBI has maintained an accommodative stance. The RBI Governor’s assurance to provide adequate credit by ensuring ample liquidity & announcement of Rs 10,000 crore additional liquidity to NHB must be passed onto the real estate as the sector has been struggling to source funds for projects. Real Estate sector is one of the key drivers of the economy and needs multi-faceted support from the Central bank and the Government to recover and bounce back to pre-COVID levels.”
Umesh Revankar, Vice Chairman & MD, Shriram Transport Finance, said, “RBI’s first monetary policy of FY22 was on expected lines with rates unchanged and accommodative stance retained. The Governor’s underlying commentary was dovish with continued priority on supporting economic revival measures through ample liquidity to all productive sectors. Recognising the key role played by NBFCs in making credit available to the last mile, on tap TLTROs and bank lending to registered NBFCs for on lending to priority sector has been extended by 6 months to September 30, 2021 and this will be particularly useful in supporting & nurturing financial needs of rural economy and semi-urban businesses, micro/small/individual operated businesses amid the current COVID-19 protocols.”
Anagha Deodhar, Chief Economist, ICICI Securities, said, “The MPC’s decision to pause and maintain accommodative stance is along expected lines. However, it retained GDP growth projections for FY22 at 10.5% despite large stimulus in other countries and its potential impact on global growth. In this policy, the biggest announcement was GSAP 1.0 under which the RBI plans to buy government securities worth Rs 1trn in Q1FY22.
Along with GSAP, the RBI also announced extension of several liquidity facilities.
Together, these measures are aimed at keeping financial conditions benign, ensure orderly evolution of the yield curve and supporting the nascent recovery.”
Dinesh Khara, Chairman, SBI, said: “The RBI policy statement is a clear commitment to assuage uncertainties in the market through guaranteed, continued liquidity support and explicit guidance to navigate through the current COVID surge, the duration of which is uncertain. This apart permitting banks to co-lend through NBFC’s and bringing it under PSL guidelines will broad base lending. The enhancement of loan limits against electronic warehouse receipts will encourage lending for allied activities. Several steps undertaken in the realm of payment systems will give a fillip to digital adoption and competition. The idea of setting up a Committee to review the working of ARC’s could open up new vistas of faster resolution. Overall, the policy statement leaves a clear imprint on growth.”
“RBI’s MPC expectedly stood pat on policy rates and reiterated accommodative stance as long as necessary to ensure economic activities are fully supported for durable recovery despite second wave of Covid-19 cases. The central bank retaining its 10.5% GDP growth forecast for FY22 shows faith in contribution to economic revival by key sectors and its liquidity measures along with bank lending to NBFCs being extended till September 30, 2021 is an acknowledgement of the systematically important role NBFCs have played in lending to the last mile. We remain steadfast and true to our promise of supporting all financial needs of MSMEs and individuals in making them Atmanirbhar,” Khara added.
