Economists and financial experts have welcomed RBI’s widely expected status quo on repo rate, and other announcements to spur economic growth and ensure money supplies effectively.
The RBI had kept the key policy rate unchanged at 5.15 per cent. This follows a cumulative 135 basis points (bps) cut in repo rate since February to December 2019.
The six-member Monetary Policy Committee headed by RBI Governor Shaktikanta Das unanimously decided to keep the repo rate unchanged. Bank of India CMD A K Das termed the RBI policy quite progressive and forward looking.
“Notwithstanding unchanged policy rates, introduction of Term Repo opens up ways to transmit the signal rate changes,” he said. “Measures like DCCO extension for realty, MSME window expansion for restructuring and CRR exemption for incremental funding to key segments are growth oriented and promise to provide the much needed impetus to bank lending,” Das said.
According to Rajni Thakur, Economist, RBL Bank, MPC’s decision was on expected lines. “The changes in development and regulatory policies however were a positive surprise and could potentially turn out to be a big support to the troubled sectors in the economy,” Thakur said.
Specific announcements in terms of CRR relief or long-term durable liquidity for banks push the overall credit availability in the financial system. Whether these steps manage to improve demand conditions is another question all together, she added.