Interest rate to say high as bankers see no rate cut in FY15
Bankers on Tuesday said there is little chance of a rate cut in remainder part of the current fiscal as the Reserve Bank kept key policy rates unchanged except cut in SLR in its bi-monthly monetary policy review.
Mumbai: Bankers on Tuesday said there is little chance of a rate cut in remainder part of the current fiscal as the Reserve Bank kept key policy rates unchanged except cut in SLR in its bi-monthly monetary policy review.
Terming the RBI's stance as marginally hawkish, SBI chairperson Arundhati Bhattacharya said that the 6 percent inflation target is challenging and RBI is unlikely to cut rates this fiscal.
"The RBI policy statement on Tuesday strikes a marginal hawkish tone with a firm eye on 6 percent inflation target by January 2016. The 6 percent retail inflation target looks challenging and to that extent, the RBI will hold rates at least till that time it is not breached," she said.
"Banks will thus need to factor possibly a prolonged policy pause in their decision-making," she added.
Rajan on Tuesday held the key rates unchanged as expected but commentary over achieving the 6 percent CPI number on by January 2016, with an admission of it being an uphill task, seems to have frayed the bankers' sentiment.
Private sector lender Yes Bank chief economist Shubhada Rao said the "dovish" stance of the last policy statement has been dropped and added that she does not expect any change to the repo rate, which stands at 8 percent.
"Interest rates are unlikely to come down in the near future. The status quo would continue for some time," Oriental Bank of Commerce CMD S L Bansal said.
Private sector lender ING Vysya's economist Upasna Bharadwaj also said the status quo will continue throughout the year, but welcomed the 0.50 percent cut in SLR or banks' mandatory government bond holding requirements.
Foreign lender ANZ said there is a scope for the SLR to be lowered further.
Bhattacharya said the move will provide up to Rs 40,000 crore in extra liquidity to the system.
Some analysts say this will be an inconsequential measure as banks already hold excess bond holdings.
Bhattacharya said the move to lower the held to maturity (HTM) ceiling by 0.50 percent to 24 percent of NDTL will also have little impact as most of the banks are holding less than 24 percent in HTM.