The decision of the RBI’s monetary policy committee to reduce the policy repo rate by 25 basis points is a right step at right time by the regulator, according to Mahabaleshwara MS, Managing Director and Chief Executive Officer of Karnataka Bank Ltd.
He told BusinessLine that the external economic factors are now in favour of an economic growth. The basic requirement for economic growth is the credit growth.
The measures like the GST implementation and all other reforms are all long-term benefit-oriented reforms. “So I think this is a right step at right time by the regulator,” he said.
To a query on the rate cut for lending, he said data on CPI inflation will be out by August 12 and on WPI inflation by August 14.
In such a situation, he said, the bankers might wait for those data also in finally taking a call on rate cut.
Stating that the rate revision is happening almost on a monthly basis after the introduction of MCLR, he said bankers are now well equipped to adjust the MCLR and pass on the benefit to customers.
Since MCLR decision is taken on monthly basis, the decision of bankers is not directly linked to repo rate now. Bankers have their own leg rooms for rate revision now.
He said already 1.5-2 per cent of the rate reduction benefit has been passed on to the customers. He also said that the deposit interest rates may come down.