Pause in rate rise a pleasant surprise: SBI’s Khara

Bankers and industry said the Reserve Bank of India’s decision to pause increase in interest rates is perfectly timed and will bolster business sentiment

Bankers and industry captains welcomed the Reserve Bank of India’s (RBI) decision to pause increase in interest rates describing the move as‘perfectly timed and one which will bolster business sentiment.

Dinesh Khara, Chairman, State Bank of India (SBI) said the RBI’s decision came as a pleasant surprise given the market talks of one more final rate increase. 

“With uncertainty looming large, this decision was perfectly timed. Simultaneously, the bouquet of regulatory initiatives like linking UPI to credit and developing the onshore market will spur innovations in product offerings,” he said. Mr. Khara said the decision to enable tracing unclaimed deposits and strengthening of grievance redressal are customer centric. “Overall, RBI’s April policy, guides the market in terms of expectations alignment,” he added.

Commenting on the RBI’s monetary policy announcement, Sanjiv Bajaj, President, CII, said “We strongly welcome the RBI’s move to decouple from the global tightening cycle and pause interest rate hike, which is in line with what CII had been advocating for long now.” “We agree with the Central Bank’s observation that the lagged impact of the past rate hikes should be allowed to percolate into the system, and not stifle demand by further rate hikes. Though the domestic demand impulses remain healthy, the headwinds from the global banking stress have gained pace, hence it was important for the Central Bank to remain cautious in its stance,” he said. 

“This move by the RBI will help to bolster business sentiments by containing the rise in borrowing costs which have constricted the pricing power of firms,” he added.

Citi India CEO Ashu Khullar, CEO, Citi India said, “The RBI has proactively and consistently drawn a balance between supporting economic growth and managing inflation to ensure price and financial stability, making the economy more resilient. The decision to pause, after an effective rate hike of 290 bps since April last year, should be seen in that context.”

“It’s important to note, the regulator has emphasised the need to remain watchful in an environment of heightened uncertainty. In addition, the announcement of expanding the scope of UPI network to facilitate payments financed by credit from banks is a welcome step that will continue to fuel payments and new services,” he said.