RBI's decision surprises markets; CRR rollback welcomed by industry players

The RBI's decision to keep repo rate unchanged surprised the markets and industry but its decision to withdraw the incremental CRR that it had imposed recently, has been welcomed by industry players.

Anand Natarajan, Head of Strategy & Business Execution, Fullerton India Credit Company Ltd , said: “Reserve Bank of India’s decision to leave rates unchanged is prudent and thoughtful, and brings medium term positives. The RBI has rightfully kept the stance accommodative and ready for response, and has resisted knee-jerk policy actions. This is pragmatic, and keeps the market primed for rate cuts in 2017, environment withstanding. The CRR rollback restores locked liquidity, which is also positive. It is comforting to note that the MPC vote was unanimous in the policy stance.”

Shanti Ekambaram, President – Consumer Banking, Kotak Mahindra Bank , said, “The RBI surprised most market participants today with a “pause” on interest rates as against expectations of a 25 bps repo rate cut. Uncertain global and local factors have prompted this pause, and the RBI will now wait and watch for more trends and data."

Terming it as a good policy, the Managing Director and Chief Executive of Canara Bank, Rakesh Sharma, said that the RBI has kept the key rates unchanged citing risks to inflation. “This will ensure stability to currency and anchor inflation expectations.”

“However they have rolled back the temporary measure which impounded 100 per cent of incremental NDTL by means of CRR. The revised MSS will ensure banks get a yield on their new deposits arising out of demonetisation.''