Friday, 9 October 2020

Quote by Mr Dinesh Kmar Khara Chairman

Quote by Mr. Dinesh Kmar Khara Chairman, SBI on RBI's Monetary Policy

“Today’s policy statement by RBI is a perfect exposition of doing “whatever it takes” to revive growth. With growth projections at -9.5 percent and inflation set to be higher at least for now and the possibility of renewed infections in many countries, the monetary policy committee has righty chosen to keep the policy stance accommodative and relying more on discretion based policy responses rather than being strictly rule-based. 

Accordingly, the decision to go down the OMO route for SDL borrowings, increasing the limit for risk weights for the retail portfolio up to Rs. 7.5 crores and linking housing loan risk weights to LTV ratio are policy innovations that will please the markets and nudge the term structure of rates lower. The policy has also targeted specific sectors that have high forward and backward linkages notably the retail and real estate sector. 

Additionally, the decision to operationalize the Co-origination model is right as it brings the best of banks and NBFC together. This will surely increase the reach of the financial sector at such a critical point. The other focus of development and regulatory policy namely discontinuation of automatic caution listing for exporters, 24x7 availability of RTGS, and perpetual validity of CoAs issued to payment operators are also welcome measures. Overall the policy is fixated to revive growth and has attempted to prepare a conducive ground for the same.”

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