Leading industry chamber Assocham on Friday said that the decision by the Reserve Bank of India (RBI) to cut the cash reserve ratio by 50 basis points, releasing Rs 1.16 lakh crore into the banking system, is a pragmatic measure to maintain the inflation-growth balance in the face of evolving macro-economic situation.
The chamber also welcomed the measures to boost India’s foreign exchange inflows by revision in the FCNR(B) rates, thereby providing stability in the forex market. “The decision by the RBI monetary policy committee to keep the policy rate unchanged at 6.50 per cent while slashing the CRR by 50 basis points has to be seen as a holistic approach towards keeping a good balance between keeping inflation under check for a sustainable economic growth,” said Assocham President Sanjay Nayar.
Assocham Secretary General Deepak Sood added that releasing Rs 1.16 lakh crore through CRR cut should be a major relief for the banks and the industry as the incipient signs of liquidity tightening were seen. While the downward GDP growth projections at 6.6 per cent for the current fiscal were realistic, the growth trajectory would normalise above 7 per cent from the fourth quarter of 2024-25 into the next financial year. “We would agree with RBI Governor Shaktikanta Das’ assessment that the slowdown in economic activity has bottomed out,” said the industry chamber.
As for inflation, as the RBI Governor has said, the situation should ease in the next couple of quarters because of good prospects of winter Rabi crop and normalisation in prices of food and vegetable prices from January onward. CS Setty, Chairman of the State Bank of India (SBI), said the monetary policy announcements are pragmatic, candid and has crossed important milestones in regulatory and development policy space. “The decision to form a committee to investigate the issue of ethical AI in financial services and use of technology to detect mule accounts is timely,” he added.
