India Inc said on Friday that it expects the repo rate to drop in the future as the cost of funds is expected to come down in the coming times, and expects the accommodative policy of the Indian Reserve Bank (RBI).
The RBI has decided to leave the benchmark interest rate unchanged at 4%, but has maintained an accommodative stance as the economy grapples with the second wave of COVID-19.
Sanjay Aggarwal, chairman of the PHD Chamber of Commerce and Industry, said the RBI has maintained an accommodating position for as long as needed to revive and support growth on a sustainable basis and to mitigate the impact of COVID-19 , apart from a goal of keeping inflation inside. target.
“We look forward to a possible reduction in pension rates in the future, as the cost of funds is expected to fall in the times to come.
“We expect an accommodative policy to continue, as depressed demand needs to be rejuvenated with increased liquidity for businesses and individuals,” Aggarwal said.
He added that due to the current pace of vaccination and the recovery in demand, the normal growth curve would take time.
Assocham said the RBI’s decision sends an important message from the central bank to reaching out to those most affected by the COVID-19 pandemic, through increased and wider windows for low-rate loans.
“While keeping the benchmark pension rates unchanged at 4% was within the expected lines, extending the special liquidity window of Rs 15,000 crore for contact-intensive sectors would help the more intensive sectors. employment, especially among micro, small and medium enterprises (MSMEs), “It said.
He added that another window of Rs 16,000 crore for MSMEs through SIDBI would allow financial institutions to reach smaller business entities in this difficult hour.
“The RBI’s macroeconomic projections of 9.5% growth and retail sales inflation of 5.1% for fiscal 22 are consistent with the current situation marked by a calibrated opening of the economy, fostered by the increasing penetration of immunization and the consequent increase in rural demand. “said Assocham.
CII said that while keeping key rates unchanged, the RBI’s decision to continue using its unconventional tools to keep yields stable as part of a large government borrowing program helps keep borrowing costs down. content for the private sector.
“Measures such as the provision of a cash-at-source window worth Rs 15,000 crore for contact-intensive sectors, a special liquidity facility to SIDBI for on-lending and refinancing and Extending borrower coverage under Resolution 2.0 should all bring relief to besieged sectors, ”the chamber added.
Commenting on the RBI’s monetary policy announcement, the FICCI Chamber of Industry said the central bank’s consistency and approach to dealing with current challenges both economic and health are commendable.
“The second wave had a debilitating impact and in this hour of need all levers must be pulled to support our MSMEs.
“Support for contact-based services such as hotels / restaurants / tourism / auxiliary aviation services / spas / lounges via the separate Rs 15,000 crore liquidity window should bring some relief to the industry,” he said. he declared.
In this time of crisis, said FICCI, it would urge members of the banking fraternity to redouble their efforts and support the business sector, including MSMEs, in industry and services.