New Delhi, Aug 5 — The measures to deepen the cooperative banking ecosystem through the proposed resumption of on-tap licensing for Urban Cooperative Banks and addressing portfolio concentration in rural cooperatives will further strengthen financial inclusion and last-mile credit delivery, CS Setty, Chairman, State Bank of India and Indian Banks’ Association (IBA), said on Wednesday.
The RBI’s decision to keep the policy rate unchanged while revising the growth outlook upward, and the inflation forecast downward reflects a balanced and pragmatic approach.
The policy guidance reinforces continuity while preserving macroeconomic stability, said Setty.
“On the regulatory front, the proposed review of the interest rate framework to enhance transparency in loan pricing and strengthen monetary transmission is a welcome step,” he mentioned.
According to Ajay Kumar Srivastava, Managing Director and CEO, Indian Overseas Bank, the RBI's decision to hold the repo rate at 5.25 per cent and continue with its neutral stance reflects confidence in the resilience of the Indian economy, even as global conditions remain volatile amid the West Asia conflict and shifting trade policies.
“The Reserve Bank's own assessment shows the banking sector continues to hold strong capital buffers, healthy liquidity and improving asset quality, which reinforces confidence in the stability of the financial system,” said Srivastava.
The proposed harmonisation of interest rates on advances across all regulated entities, along with the draft guidelines for resuming licensing of urban co-operative banks, will further strengthen transparency and customer protection, he said.
Vinod Francis, SGM and Chief Financial Officer, South Indian Bank, said the RBI's decision to maintain the policy rate enhances stability and will sustain India's strong credit growth momentum.
“This policy stability will continue to support healthy credit demand across MSMEs, retail and commercial banking, underpinned by resilient domestic demand and continued investment activity,” said Francis.
According to Radhika Rao, Senior Economist and Executive Director at DBS Bank, the overall guidance was, however, less hawkish than anticipated.
“With rates unchanged and no immediate signal of tightening, market attention is likely to shift back to macro developments between now and the next policy review. The expected recovery in portfolio inflows, together with continued flows through RBI swap windows, should provide a constructive backdrop for domestic financial markets,” said Rao.