New Delhi: The industry has said the 25 basis point rate hike by the Reserve Bank will further weaken economic growth, but expressed relief at the central bank's hinting at a pause in pushing up the lending rates.
The industry welcomed the RBI move to deregulate savings bank interest rates, a step which lenders said could fetch better returns for depositors as competition will intensify.
"Yet another interest rate hike (effected) by the RBI will further weaken economic growth and impact all other indicators," industry chamber Assocham President Dilip Modi said Tuesday.
However, the central bank has hinted that it may not hike the short term policy rates further.
"One of the main positives of the RBI policy is the indication that it will not raise policy rates further... The second positive is the savings rate deregulation which will give banks more freedom," CII Director General Chandrajit Banerjee said.
Expressing similar views, Ficci Secretary General Rajiv Kumar said, "There was a definite statement of intent from RBI on ruling out further rate increases in December.
"The deregulation of saving bank deposit rate is a welcome move and is likely to lead to increased product innovations across banks through more competition."
Ficci, however, expressed concern as to whether smaller banks would be able to compete in the market with the larger banks after this move.
RBI on Tuesday hiked interest rates by 25 basis points. With this, the short term lending (repo) and borrowing (reverse- repo) rate now stand at 8.5 percent and 7.5 percent respectively. This is the 13th hike in a span of 20 months to tame inflation.
First Published: Tuesday, October 25, 2011, 16:46