The Reserve Bank's decision to keep rates unchanged in the mid-quarter monetary policy review is a welcome change from the incessant rate hikes so far. This may encourage credit growth, which has seen moderation, and help revive the investment climate in the country, said bankers.

The monetary policy stance is a positive one as it signals that inflation movement has been on expected trajectory, said Mr M.D. Mallya, Chairman Managing Director, Bank of Baroda. “There may not be an immediate reduction in interest rates. But it should give comfort to the industry as it indicates a softer interest regime can be expected going ahead,'' he said.

Corporates can draw comfort from the ‘no hike' stance and step up their borrowing and planning for expansion, which was missing in the recent past, because of the uncertainty. Given these sentiments, it is reasonable to expect that 18 per cent credit growth for the current fiscal can be achieved, Mr Mallya added.

Ms Chanda Kochhar, Managing Director and CEO, ICICI Bank, said the RBI's move is a positive step as growth has been moderating and inflation, though still above comfort levels, has started showing signs of easing. “The mid-quarter policy statement has addressed the concerns on the interest rate side, by clearly indicating a likely reversal in the cycle with monetary policy actions being directed towards addressing growth related issues going forward,'' she said.

According to Mr M.V. Tanksale, Chairman and Managing Director, Central Bank of India, the fact that the RBI has not hiked rates despite core inflation not moving down is perhaps an indication that these levels are acceptable and we can look forward to a reversal.

“Now credit demand will come forth, for the simple reason that when there is certainty people will borrow. In the next six months interest rates will ease. However, 18 per cent credit growth this fiscal could be a challenge,'' he said.

A rate cut by banks may not happen in the near future, either in lending or deposit rates said Mr Kislay Kanth, Senior Director, Research, MAPE Securities.

“Commercial banks had not passed the earlier rate increase made by the RBI and there is no likelihood that lending or deposit rates will make a change in the near future. Banks will await some growth in the credit demand to decide their next steps. In general, the tendency could be to provide bigger incentives to borrowers where possible within the current rate environment,” he said.

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