Kaushik Mehta, Founder & CEO of RUloans Distribution Pvt Ltd states, “The recent RBI decision to maintain the repo rate at 6.50%, with a 'withdrawal of accommodation' stance, brings promise for new home loan borrowers and others. Stable interest rates instill confidence, reducing the urgency for loan refinancing. As the festive season approaches, this stable rate environment will impact personal and consumer loans, including those for festive shopping. Consumers are likely to leverage favorable lending conditions. Stable rates may also boost demand for homes and vehicles during this festive period, fueling economic growth. Moreover, the stable rate environment is expected to stimulate demand for business loans and Loan Against Property (LAP). Businesses needing working capital and anticipating manufacturing growth are likely to find this lending atmosphere favorable. This stability sets the stage for robust lending growth in the crucial last two quarters of the financial year, benefiting financial institutions and borrowers alike, and supporting economic stability and growth."
Tribhuwan Adhikari, MD & CEO of LIC Housing Finance expressed, “RBI's decision to maintain the repo rate unchanged in today’s MPC meeting is on expected lines. The move demonstrates RBI's continued commitment to support growth and maintain economic stability. The steady interest rate environment will help us in keeping our offerings competitive and affordable. Overall, the move will improve the sentiments.”
Shilpa Pophale, Managing Director & CEO, Electronica Finance Limited shared, “RBI’s decision to keep the key policy repo rate unchanged at 6.5 per cent is a positive move. This will send a positive signal to the various constituents of the economy including our customer segment of MSME borrowers and ensure that the investment cycle continues. This will also help spur growth during the crucial festive season. Another welcome move is of RBI allowing middle and base layer NBFCs to use credit risk mitigation instruments for reducing counterparty exposures under credit concentration norms.”
Niraj Kumar, Chief Investment Officer, Future Generali India Life Insurance Company Ltd. stated, “MPC has delivered an In-line and balanced policy, with the overarching focus being maintaining the stability in policy stance, despite being clouded by the chaos in global rates market and commodities. While the MPC’s mention of the need for OMO sales has slightly spooked the markets in the interim, it’s imperative from liquidity standpoint, especially with Global bond index inclusion on the horizon. Overall, the MPC has stuck to theme of continuity in the policy exercising caution and being data dependent amid the looming uncertainty around global markets.”
Aalesh Avlani, Founder and Director, Credit Wise Capital was of the view, “Amidst global uncertainties, the RBI's decision to maintain the repo rate aligns with our expectations. This decision brings a welcome dose of optimism as we step into the festive quarter, serving as a significant means for increased consumer products including automobile purchases during this festive season. Also, it's reassuring to see the RBI recognizing the resilience in credit growth within the banking sector. Moreover, the RBI's decision to permit middle and base layer NBFCs to utilize credit risk mitigation tools to reduce counterparty exposures under credit concentration norms is a welcome move.”
Raghvendra Nath, Managing Director, Ladderup Wealth Management added, “In order to maintain the nation's strong growth rate, RBI was anticipated to leave the repo unchanged. Given the growing oil prices and the current global difficulties, the central bank has little reason to become more dovish at this point. The high interest rates are here to stay for quite some time before we see any changes being announced by the central banks.”
Shlok Srivastav, Co-founder and COO, Appreciate said, “While the RBI did sound a note of optimism in terms of what the future holds for India, overall, it’s clear that the current uncertainty in the global environment is weighing on it quite heavily. Nevertheless, its prognosis that September inflation is likely to be lower is good news, as is its affirmed alertness when it comes to handling inflation expectations. The RBI is undoubtedly going to need a fair amount of time to bring the inflation rate back to the ideal band. Global macro factors will play a key role in determining the timeline for this. However, for now, its maintenance of the retail inflation rate at 5.4% for 2023-24 looks like a positive sign. In addition, the 5.8% YoY rise in remittances in Q1 FY24 and the decline in the current account deficit to 1.1% of GDP are also heartening. As usual, the market will be looking to the RBI’s upcoming guidance for more specific cues.”
Anitha Rangan, Economist, Equirus summarised, ‘RBI Policy – Turning Pitch, Not played – No policy action. Despite global uncertainties which warrant a close monitoring, RBI chose to keep policy rate unchanged at 6.5% and maintaining its “withdrawal of accommodation” stance. Surprisingly RBI has retained its inflation estimates for FY24 at 5.4% despite marginally increasing Q2 estimates to 6.4% (6.2%) and taking down Q3 to 5.6% (5.7%). FY 24 GDP growth rate remains unchanged at 6.5%. Notably RBI highlighted high inflation as the major risk to macro stability. The high inflation risk is emanating from volatile food and energy prices both domestically and globally, driven by geo-political factors and climate changes. While headline inflation is expected to moderate in the near term, RBI did cite that outlook uncertainty on food inflation comes from lower reservoir levels, lower sowing, volatile global food and energy prices. The positive driver is that core inflation is softening and is critical for keeping the headline inflation lower. Three statements from the policy gives us a very hawkish outlook a) comment that tight global monetary stance could persist higher than expected b) food inflation pressures may not see sustained easing c) reserves position continuing to decline with the Sept-23 overall having seen ~$12 bn of decline to contain rupee volatility suggest that RBI is on a vigilant watch mode. While batting defensive on a turning pitch, RBI is remaining very careful. As long as currency is maintained long pause is the call. However on a turning pitch, a surprise shot can emerge at any time.”
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