New Delhi, Dec 6 (SocialNews.XYZ) Leading industry chambers on Friday welcomed the RBI decisions especially around the repo and cash reserve ratio (CRR) rates, saying that these measures would ensure a better balance between growth and inflation management.
They appreciated the calibrated steps undertaken by the central bank during its three-day Monetary Policy Committee (MPC) meeting, including cutting the CRR significantly from 4.5 per cent to 4 per cent.
"It will not only enhance the liquidity in the economy but also boost business sentiments as it signifies the futuristic softening of interest rates in the country," PHDCCI President Hemant Jain said.
The MPC also decided to keep the repo rate unchanged at 6.5 per cent and to continue the alignment of inflation within the target while supporting growth, as India is well-positioned to benefit from the emerging trends.
"The forward-looking guidance provided by RBI underscores its dedication to maintaining transparency and predictability in monetary policy," said Jain.
According to Confederation of Indian Industry (CII) Director General Chandrajit Banerjee, the 50-bps cut in CRR will help ensure the availability of additional resources for all productive sectors of the economy, especially in anticipation of a near-term tightening of systemic liquidity.
"This was a specific CII ask along with a request for moderation in headline interest rates. However, we draw satisfaction from the overall statement that the neutral stance has been maintained and with the anticipated easing of inflation, we can expect rate cuts in the foreseeable future," said Banerjee.
Further, increasing the collateral-free agriculture loans from Rs 1.6 lakh to Rs 2 lakh will significantly help in improving the credit flow to the agriculture sector, thereby providing a strong impetus to the rural economy, said the leading industry chamber.
"Our forex reserves have been healthy. An increase in interest rate ceilings on FCNR (B) rates by 200 basis points is indeed a positive step as it will help boost the forex reserves further due to inflows of funds from the Indian diaspora," Banerjee added.
The RBI’s announcement on the introduction of a new Secured Overnight Rupee Rate (SORR) would build a new interest rate derivative market.
"This will bring greater transparency and improve the credibility of interest rate benchmarks. Besides, this measure would help in enhancing the trust of global investors in the Indian financial system," said the CII DG.
The measures of "setting up a committee of experts to suggest a framework for responsible and ethical use of AI" and "setting up RBI podcast" will also help in addressing and protecting the interest of customers in the financial sector, according to the industry chambers.
"We are hopeful that the economy will attain its high growth trajectory once again in the coming quarters," Jain noted.
Source: IANS
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