Voicing surprise over the banking regulator's move on the 25 basis points repo rate cut this morning, the Managing Director and Chief Executive of Karur Vysya Bank K Venkataraman said “coming as it does at a time when rate yields had started moving up was a pleasant surprise.”
“In hindsight, I did think that a rate cut before long could be in the offing, as the earlier one (in mid-January this year) was just 0.25 per cent. A 50 bps cut would have made an impact,” he said, justifying his guess.
He however did not fail to point out that this co-ordinated action by the RBI within a week of the Union Budget announcement would help spur growth.
One major trigger to drive growth could be improvement in public spending rather than a cut in the rate. Once this happens, private investments would follow and the demand in turn would pick up.
While conceding that there was no pick up in the off-take of credit he said public spending would help push the demand.
The bank, he said, only recently effected a cut in the rate, much ahead of many of its peers. “We will assess the situation and take a call nevertheless if there is further scope for a cut in interest rate,” Venkataraman said.
When asked if the bank faced pressure from customers whenever the regulator made some announcement, he said “customers are not linking this rate cut for putting pressure on us to cut the lending rate”.