INSUBCONTINENT EXCLUSIVE:
The Reserve Bank of India (RBI) held rates steady on Thursday and retained an accommodative policy stance as it sought to support faltering
growth and avoid stoking already high inflation levels, Reuters reported.
All six members of the MPC voted to keep rates steady and retain
Economist and Executive Director, Anand Rathi Shares - Stock BrokersDespite our expectation of no rate cut in 2020, the categorical
statement by MPC about the possibility of rate cut should boost sentiments
Minor fall in some lending rates, boost to bank NII
Linking credit to medium industries to external benchmark, removal of CRR requirement on fresh retail housing and auto loans and credit to
These steps may marginally reduce the interest rates on such fresh loans
interest income.
Jimeet Modi, Founder - CEO, Samco SecuritiesBudget Part II was delivered by RBI in the form of lowering costs to MSMEs and
bringing some life into realty wherein loans to commercial sector will be considered as standard
RBI indeed used all its might to force banks to lower interest rates to induce transmission for the benefit of end users, which it has
New loans are now 69 basis points (bps) cheaper and old loans are cheaper by 13bps given the total 135 bps cut in 2019
RBI has smartly lubricated the slower moving parts of the economy.
Amar Ambani, Senior President - Institutional Research Head, YES
SecuritiesWith inflation expected to remain elevated in the coming months, we see a long pause on Repo rates
However, we expect the RBI to continue to act with other monetary tools like OMOs and Operation Twist
RBI and government will likely take steps to improve transmission of rates in the economy
We see headline inflation coming off significantly in H2 FY21, with favorable base effect kicking in and fuel and food prices decelerating
RBI will be in a position to cut rates again after a long pause, in our opinion
through reduction in NDTL calculation to the extent of incremental retail lending for automobiles, residential housing, and MSMEs could be
positive for credit flow in the medium term
Overall, the RBI has delivered positively towards growth and credit without deviating from the inflation targeting framework
Evolution of borrowing costs as well as credit flows need to be carefully watched.
Mihir Vora, Director - Chief Investment Officer, Max Life
InsuranceWhile the policy suggests that there is space for further rate action, a cut in the April policy would hinge on trends in food
A 25 basis points (bps) rate cut in the next 6 months is possible
We expect the RBI stance to remain liquidity accommodative.
Anuj Puri, Chairman, ANAROCK Property ConsultantsIn a major relief to the real
estate sector and further complementing many of the previous initiatives by the government in 2019, RBI has decided to extend the
restructuring of project loans by a year
Loans for projects that have been delayed for reasons beyond the control of their promoters have been extended by another one year without
downgrading the asset classification
This aligns with the treatment accorded to other project loans for the non-infrastructure sector
This is a big move and will bring the much-needed relief to the cash-starved real estate sector - and to both developers and the HFCs from
the liquidity perspective
It will help ease out the time for maintaining and managing cash flows for cash-strapped developers and help them to completing several
Head of Research, Emkay Wealth ManagementIt was widely expected that the RBI was likely to continue with the pause till there is greater
visibility on the inflation front
At this juncture, rate modification is actually not required as the interbank market has a huge surplus of close Rs.3 Lakh Crs to support
the liquidity requirements of the system, and this alone will ensure that the short-term rates do not move up
The status quo comes as a relief to the short end of the curve, but the pressures at the long end may persist for longer time.
Deepthi Mary
Mathew, Economist at Geojit Financial ServicesIt was an expected move by the RBI, maintaining the repo rate unchanged at 5.15 percent
With the inflation rate breaching the upper band, it will take time for the Central Bank to revive the rate cuts
By maintaining the accommodative stance, there is scope for rate cuts once the inflation rate falls back to a comfortable level.
Ravikant
Bhat, Analyst - BFSI - Insurance, IndiaNiveshRBI expectedly held the policy rates even as it raised the near term inflation forecast to 6.5%
However, noting improved arrivals of Kharif and Rabi harvests and easing household inflation expectations, the inflation is forecast to ease
The accommodative stance of the policy alongwith multiple supportive measures for MSMEs, NBFCs and banks are steps in the right direction
which will help ease credit flow, help banks manage stress and soften loan pricing.
Rumki Majumdar, Economist, Deloitte IndiaAs had been
expected by us, the RBI decided not to cut rates and to be in a wait-and-watch mode in the Feb policy meeting while continuing on with an
This is because inflationary nor demand pressures for goods other than food in the near future may remain low owing to weak demand and
The expansionary monetary policy stance was necessary and is an assurance that there will be no reversal of easing and that the RBI will not
completely in line with our expectations
RBI believes that the inflation outlook remains uncertain and may remain elevated through the first half of FY21
Also, it expects the interest rate transmission to be more effective and act as a growth booster as more banks link their lending rates
directly to the policy rate
Therefore, any further rate cut looks a little unlikely in the next two quarters though RBI has decided to 'persevere' with the ongoing
The central bank has also decided to incentivize banks' lending for retail and MSMEs further by giving equivalent benefit on their CRR
requirement.
Ranjan Chakravarty, Economist and Product Strategist, Metropolitan Stock ExchangeThe RBI has wisely chosen to align itself with
market expectations in this announcement
At this delicate juncture in the growth story any sudden unexpected move would have spooked the market, which was the last thing needed
The implicit tightening in leaving repo rates unchanged and the continuation of the accommodative stance augur well to manage inflation and
set the stage for the coming turnaround in 2H, 2020.
Amit Gupta, Co-Founder - CEO, TradingBellsThe market is taking this policy on a very
positive note where Nifty has taken out its crucial supply zone of 12100-12135
If it manages to sustain above this zone then it may head towards 12300 mark and even lifetime high can't be ruled out in the coming days
while in the downside 12000-11950 zone has become a strong base
NBFC stocks like HDFC Ltd, M-M finance, L-T finance, Shriram transport finance, Bajaj Finance, PEL and LIC Housing finance are major
beneficiaries for the move taken by RBI
In terms of banking stocks, Axis Bank, Federal Bank and IndusInd Bank are the key beneficiary
The relief for the real estate sector will be helpful for stocks like DLF, Oberoi Realty, Godrej Properties, Prestige, Sobha, etc.
