The Reserve Bank's decision to hike repo rate by 25 basis points was on expected lines but the policy focuses more on inflation despite the recent moderation in the number, bankers said on Wednesday.
Among the foreign lenders, Standard Chartered's country head Zarin Daruwala said the Reserve Bank of India's confidence in the Indian economy came through as it revised its H1FY24 growth estimate upwards to 7 per cent
The Reserve Bank's decision to hike repo rate by 25 basis points was on expected lines but the policy focuses more on inflation despite the recent moderation in the number, bankers said on Wednesday.
"Repo hike of 25 basis points is on the expected lines. Evidently, the policy is focused more on managing inflation, even though the recent retail inflation readings are showing signs of moderation," industry lobby Indian Banks Association's Chairman A K Goel, who also heads state-owned Punjab National Bank, said in a statement.
It can be noted that the last two readings of the headline inflation have come within the upper tolerance band of the central bank and some analysts, including in-house economists at the country's largest lender SBI, were expecting a pause on rate hike. With the latest hike, the repo rate is at 6.50 per cent.
SBI Chairman Dinesh Khara said the continuing strength in US job data has made monetary policy making into a delicate balancing act for emerging economies and seemed to welcome the slew of announcements on the regulatory front beyond the rate hike.
"The proposal to address the issue of penal charges on services will bring a rule-based regulation. The initiatives on climate risk will improve compliance, capital budgeting and financial disclosures for banks," Khara said.
Among the foreign lenders, Standard Chartered's country head Zarin Daruwala said the Reserve Bank of India's confidence in the Indian economy came through as it revised its H1FY24 growth estimate upwards to 7 per cent.
"While the RBI sounded cautious on sticky core inflation, it will closely monitor the impact of future rate hikes on lending rates, some of which are already above the pre-pandemic levels," she added.
In the non-banking space, Shriram Finance's Executive Vice Chairman Umesh Revankar welcomed the policy for expanding the scope of the TReDS (Trade Receivables Discounting System) platform to improve their cash flows for small businesses.
"We are confident that after a grim period characterised by muted consumption, supply challenges and price instability, we will see sustained growth in economic activity," he said.