The 25 bps cut in repo rate is on expected lines and this is bound to pave way for increased investments, said N Kamakodi, Chief Executive, City Union Bank.
“It is clear that there is a downward movement in the rate,” he said, but when asked if CUB is also planning to effect a cut in the rate, Kamakodi said that the bank would review the situation continuously, and possibly take a call by the end of this month.
When asked about the transmission of rate cut benefit to customers, he admitted to a lag factor. “There has been about 200 bps cut so far, but the transmission by the industry has been about 75 to 100 bps. The direction is fine though.”
“Since banks control about 50 per cent of the banking sector assets, and there are certain supply side constraints, the pace of investment is not fast enough. The growth phase will start once the investment cycle starts to pick up, but we are probably 3 to 4 quarters away from that point.”
On credit pick up, he said “it has not yet started.”