Devdiscourse
Development News Edition
Give Feedback
write for Us

BIZ-RBI-ANALYSTS-REAX


PTI mumbai India
Updated: 05-12-2018 20:50 IST

The Reserve Bank of India (RBI)

opting for status quo in key policy rates was on expected

lines and the central bank is unlikely to hike rates anytime

soon, analysts said Wednesday.

"The possibility of another rate hike this fiscal

appears to be low," ratings agency Crisil said after the

release of the fifth bi-monthly policy, in which the rate

setting panel kept the repo rate unchanged at 6.50 per cent.

The agency said maintaining the "calibrated

tightening" stance will not have any impact.

Its smaller rivals India Ratings and Icra also

concurred, saying a rate hike is unlikely in the near term.

"So long RBI does not get convinced about the

sustainability and continuance of the low inflation rate

witnessed currently, it is unlikely to change its policy

stance from calibrated tightening to neutral," India Ratings

said in a note.

It said RBI's concerns on inflation emanate from

sudden spike in the price of perishables, risk from revision

in minimum support prices (MSPs), which has yet not played out

fully, crude oil prices, global financial market volatility,

fiscal slippages and staggered impact of HRA revision by state

governments.

Icra said the proposal to link banks' lending rates on

new retail and MSME loans with external benchmarks is expected

to improve the transparency in loan pricing by banks as the

existing benchmarks, especially the base rate, have not led to

a full transmission of the benefits of decline in cost of

funds for banks' to borrowers.

It added profitability of banks may see a higher

volatility, unless they are able to raise floating rate

deposits linked to external benchmarks.

On the cut in statutory liquidity ratio, it said the

action will have a relatively more positive for private sector

banks as their SLR holdings are closer to regulatory

requirements, as against public sector banks.

"Notwithstanding the already high credit-deposit

ratio, the proposed cut raises the ability of private banks to

deploy their deposits in higher yielding loan assets. Public

sector banks on the other hand will need to shore up their

capital position to pursue credit growth and benefit from the

lower SLR requirements," it said.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

COUNTRY : India

POST A COMMENT