India Inc. urges more rate transmission

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SME Times News Bureau | 04 Apr, 2019
Reacting to RBI’s repo rate cut by 25 basis points on Thursday, the Indian industry expected its hope that the rate cut will result into rate transmission by commercial banks.

"We hope that the two consecutive cuts in the repo rate would translate into lower lending rates for both retail and corporate credit. This would give an impetus to the domestic economy through greater consumption demand as well as private investments," industry chamber Ficci President Sandip Somany said in astatement.

"This is important as we do not foresee much impetus coming from external sources of growth as the global economy continues to show signs of moderation," he added.

According to Rajeev Talwar, President, PHD Chamber of Commerce and Industry, the repo rate cut is expected to induce demand and spur economic growth.

The transmission of the policy rate cut by the banking sector in terms of reduced lending rates would be crucial to induce demand and industrial growth in the country, said Talwar.

India Ratings and Research's Principal Economist Sunil Kumar Sinha said: "However, as against our expectation of policy stance moving to accommodative, RBI kept it unchanged at neutral despite lowering its CPI inflation forecast downwards."

Since the policy review in February, commercial banks have slightly lowered their marginal cost of funds-based lending rates (MCLRs), while RBI Governor Shaktikanta Das said that more required to be done in this direction.

"There has to be appropriate and effective transmission of rates," Das said following the announcement of the monetary policy review.