Industry Welcomes RBI’s Repo Rate Stance

Reserve Bank of India stated after the Monetary Policy Committee meeting earlier today that Repo rate willl remmain unchanged. Based on an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today (December 8, 2023) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent.

Also, the standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.

Further, the MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.

Industry representatives are coming forward and sharing their perspective on this important statement which shows India’s economic growth path. 

Mr. V. P. Nandakumar - Managing Director & CEO at Manappuram Finance commented, “The MPC’s decision on Friday (December 8) to keep the key policy rates steady while staying the course on monetary tightening is the best policy prescription that the central bank could deliver at this point of time.  The tightening cycle, in my view, will continue till the headline inflation returns to the below 4% mark.  For this to happen, we may have to wait for a few quarters more as food price inflation is listed as a major downward risk in the near term.  The point, however, to note here is that the past policy actions have started showing results as mirrored in the moderating core inflation print. As economic expansion gathers momentum with the apex bank projecting the real GDP growth at 7% for the current fiscal, a full 50 bps up from its earlier forecast, it is only prudential for the central bank to continue its disinflationary stance.  I don’t expect a rate cut on the RBI’s table any time soon”.

Welcoming the statement by RBI, Mr. Girish Kousgi, MD&CEO PNB Housing Finance said, “We welcome RBI’s decision to retain the repo rate at 6.5%, indicating a balanced approach to economic growth and inflation. While the long-awaited normalcy still eludes the global economy, India anticipates an optimistic growth trajectory. The GDP growth projection for FY24 to 7% from the earlier 6.5% will help maintain the ongoing economic momentum.”

“The emphasis on supporting housing consumption via urban and rural demand augurs well, providing a boost to the real estate segment. The focus on data security through the proposed cloud facility for financial institutions is also laudable and will help strengthen consumer trust and confidence. Further, the regulatory framework for web aggregation will create a more level playing field for all entities vis-à-vis loan processes, thereby ensuring an unwavering focus on customer centricity,” Mr Kousgi said, “At PNB Housing Finance, we are optimistic about the growth opportunities in the overall real estate sector, given our heightened focus on retail affordable housing, and will continue to leverage these to cement our leadership in the industry.”

Moreover, on today's RBI Monetary Policy by Mr. Susheel Tejuja - Founder & Managing Director at PolicyBoss commented, “Today, insurance commissions have been fairly simplified, thanks to EOM guidelines brought in by the regulator earlier this year. Post these guidelines coming into effect, all insurers have by and large streamlined and aligned to the new way of life and hence there is no shade of gray on this subject.

Malpractices as one mentioned by you have largely been put to check and if at all anyone still continues to do so, they would posing a big risk both personal and to the insurance company. Over time, all such malpractices will cease and it’s the policyholder who benefits from this all at the end of the day as their is greater transparency and clarity on making an informed insurance choice."