FICCI praises monetary policy by calling it ‘positive for growth revival’

Federation of Indian Chambers of Commerce & Industry (FICCI) has hailed the Reserve Bank of India (RBI) monetary policy while calling it ‘positive for growth revival.’

Earlier in the day, the RBI announced a hike in the repo rate and reverse repo rate to 6.25 per cent and 6 per cent respectively.

FICCI president Rashesh Shah said, “Today’s 25 bps rise in repo rate by RBI is based on the ground realities and it indicates towards the positive sentiments in the economy.”

“Recovery in Indian economy that has come on the back of structural reforms like GST, Bankruptcy Code and Real Estate Regulatory Authority (RERA) is firming up, and investments have started to see an uptick; RBI stance would boost the animal spirits and confidence of businesses.”

Shah further said that the GDP growth rate in the current financial year would be around 7.5 per cent.

“The manageable inflation situation and optimism in the economy is set to continue going ahead,” he added.

Meanwhile, SBI Chairman Rajnish Kumar also welcomed RBI’s move, saying it’s flexible.

“The RBI decision to raise the repo rate by 25 bps is a preemptive and welcome move. Simultaneously, the decision to keep the stance in neutral mode indicates RBI willingness to be flexible and accommodative,” Kumar said.

“On the development front, the bouquets of measures are positive. In particular, the increase in FALLCR will provide more liquidity to banks and moderate short end interest rates. Other measures like increase in threshold limits for affordable housing, encouraging continued formalization of MSME sector are in the right direction. The change in SDL valuation norms are long-term positives and the spread of MTM losses over 4 quarters will provide the banks with much-needed relief.” he added.

Meanwhile, ICICI Bank MD and CEO, Chanda Kochhar said the hike in the policy rate reaffirms RBI’s credibility as a vigilant Central Bank against the backdrop of heightened global uncertainties.

“Such timely action will ensure that inflation expectations remain anchored thereby aiding financial stability. The increase in the carve-out from SLR for LCR maintenance is a very important step that addresses the asymmetries in system liquidity and will temper the increase in short-term rates. Measures to facilitate greater transparency and depth in financial markets, such as increasing limits in ‘when-issued’ markets and short sale in government securities as well as moving to market valuations for state government securities are welcome steps. Moreover, convergence in a definition of the priority sector limit for housing loans with that of the government’s affordable housing scheme will ensure that this segment receives a fillip,” she added.

Following a hike in repo rate and reverse repo rate by the RBI, key players from the banking sector lauded the policy changes announced by its Monetary Policy Committee (MPC).

Maintaining a neutral stance, the central bank’s six-member MPC reiterated its commitment to achieving the medium-term target for headline inflation of four per cent on a durable basis.

Furthermore, the Committee said GDP growth is projected in the range of 7.5-7.6 per cent in H1 and 7.3-7.4 per cent in H2, with risks evenly balanced.